The Performance of Mergers and Acquisitions Deals with Renewable Energy Companies

With the growing global demand for clean energy sources, M&A deals in the renewable energy sector are becoming increasingly common. However, in 2023, the sector is facing significant headwinds such as high interest rates, inflationary pressures, supply chain constraints and uncertainty in the government support program, resulting in a significant decline in deal volume compared to the previous year. There are several M&A strategies in the renewable energy sector, depending on the objectives of the companies involved. Some focus exclusively on one type of renewable energy, such as solar or wind, while others prefer to diversify their assets and deal with multiple types. This study focuses on two main types of deals: those within the renewable energy industry, where one developer acquires another, and those involving buyers from the oil and gas industry, which accounts for a significant proportion of transactions in this sector. The purpose of this paper is to evaluate the performance of M&A transactions involving renewable energy companies. To achieve this goal the following objectives were set: to analyze the trends in the market of M&A transactions; to study the previous studies on the topic of assessing the effectiveness of M&A transactions in the renewable energy sector; to assess the effectiveness of M&A transactions with renewable energy companies using the event study method; to identify the factors affecting the effectiveness of transactions on the horizon of 2001-2024. The object of the study is M&A deals with renewable energy companies in the period from 2001 to 2024. The study is based on 107 deals collected from Refinitiv, using an econometric model with elements of the accumulated excess return method and factors characterizing deals and companies. According to the results of the study, it can be concluded that on average the reaction of shareholders to the studied transactions is not significant, and it cannot be stated that the selected factors have a significant impact on cumulative shareholder returns (CAR), except for the price of WTI oil and the level of debt burden for companies in the oil and gas sector.