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Shareholder wealth creation following M&A: evidence from European utility sectors

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  • Sanjukta Datta
  • Devendra Kodwani
  • Howard Viney

Abstract

Mergers and Acquisitions (M&A) of European utility sectors subsequent to privatization and deregulation triggered widespread concern due to the crucial role played by utility sectors in a country's economic and social development. From the study of a sample of 156 cases of M&A within utility sectors in Europe between 1990 and 2006, this study provides evidence on the performance of utility sectors following M&A. On one hand the findings suggest that lower levels of losses are accrued to the shareholders in the acquiring companies. On the other hand the fact that acquirer shareholders in the short run and the shareholders in the combined post-acquisition companies suffered losses in the long run triggers a negative signal for the investors in utilities.

Suggested Citation

  • Sanjukta Datta & Devendra Kodwani & Howard Viney, 2013. "Shareholder wealth creation following M&A: evidence from European utility sectors," Applied Financial Economics, Taylor & Francis Journals, vol. 23(10), pages 891-900, May.
    • Handle: RePEc:taf:apfiec:v:23:y:2013:i:10:p:891-900
    DOI: 10.1080/09603107.2013.778943
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    Cited by:

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    2. Kellner, Tobias, 2024. "The impact of M&A announcements on stock returns in the European Union," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 843-862.
    3. Chris Ratcliffe & Bill Dimovski & Monica Keneley & Tom Smith, 2017. "Long-Term post-merger announcement performance. A case study of Australian listed real estate," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(3), pages 855-877, September.
    4. Li, Minghui & Liu, Chong & Shen, Chaohai, 2020. "Does cheap electricity in a target's location add value to the acquirer? Evidence from China," Energy Policy, Elsevier, vol. 145(C).
    5. Chris Ratcliffe & Bill Dimovski & Monica Keneley, 2017. "The Performance of REIT Acquirers in the Post-Merger Period," ERES eres2017_43, European Real Estate Society (ERES).
    6. Emanuele Teti & Alberto Dell'Acqua & Paolo Bonsi, 2022. "Detangling the role of environmental, social, and governance factors on M&A performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1768-1781, September.
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    8. Raffaele Fiocco & Dongyu Guo, 2015. "Mergers between regulated firms with unknown efficiency gains," Review of Economic Design, Springer;Society for Economic Design, vol. 19(4), pages 299-326, December.
    9. Teti, Emanuele & Tului, Stefano, 2020. "Do mergers and acquisitions create shareholder value in the infrastructure and utility sectors? Analysis of market perceptions," Utilities Policy, Elsevier, vol. 64(C).
    10. Brahma, Sanjukta & Zhang, Jing & Boateng, Agyenim & Nwafor, Chioma, 2023. "Political connection and M&A performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 372-389.
    11. Bianconi, Marcelo & Tan, Chih Ming, 2019. "Evaluating the instantaneous and medium-run impact of mergers and acquisitions on firm values," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 71-87.
    12. Sanjukta Brahma & Agyenim Boateng & Sardar Ahmad, 2023. "Board overconfidence and M&A performance: evidence from the UK," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1363-1391, May.
    13. Roxana Manuela Dicu & Ioan-Bogdan Robu & George-Marian Aevoae & Daniela-Neonila Mardiros, 2020. "Rethinking the Role of M&As in Promoting Sustainable Development: Empirical Evidence Regarding the Relation Between the Audit Opinion and the Sustainable Performance of the Romanian Target Companies," Sustainability, MDPI, vol. 12(20), pages 1-17, October.
    14. Jensen-Vinstrup, Mathias & Rigamonti, Damiana & Wulff, Jesper, 2018. "European cross-border acquisitions: Long-run stock returns and firm characteristics," Journal of Multinational Financial Management, Elsevier, vol. 47, pages 31-45.

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