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Abandoned deals: the merger and acquisition process in the electricity and gas industry

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  • ten Brug, Hans
  • Rao Sahib, Padma

Abstract

High profile deals emphasize the costs of the merger and acquisition (M&A) process particularly when deals fail before closure. However, beyond anecdotal evidence, we do not know why some M&A deals in the electricity and gas industries are abandoned. We analyze a sample of over 5000 M&As in the electricity and gas industries. The three most important factors affecting M&A abandonment are if the acquirer engaged in a divestiture at the same time, whether the target firm was publicly owned, and if the acquirer already had a toe-hold (part ownership) in the target firm at the time of the M&A deal. An M&A deal is 10.17% less likely to be abandoned if the acquirer engaged in a divestiture at the same time. An M&A involving a publicly owned target firm is 9.87% more likely to be abandoned. Lastly, an M&A in which the acquirer had a toe-hold in the target company is 7.87% more likely to be abandoned. Our findings show that policy makers and practitioners should be aware that the M&A process is affected by often over-looked deal or firm specific factors.

Suggested Citation

  • ten Brug, Hans & Rao Sahib, Padma, 2018. "Abandoned deals: the merger and acquisition process in the electricity and gas industry," Energy Policy, Elsevier, vol. 123(C), pages 230-239.
  • Handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:230-239
    DOI: 10.1016/j.enpol.2018.08.042
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    3. Wafa Tariq Waqar & Yan Ma, 2024. "Acquirers’ corporate governance ratings and the likelihood of deal completion: Do stakeholders care about the agency hazards of European cross-border acquirers?," Review of Managerial Science, Springer, vol. 18(10), pages 2815-2848, October.
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