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"Fifty in Five": The Prospects for Merger in the Electric Utility Industry

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  • Ray, Dennis J
  • Thompson, Howard E

Abstract

By analyzing four case studies of merger attempts between electric utilities, the authors conclude that there are not strong incentives for a wave of combinations in the industry. Potential synergy gains do not provide a strong motivation since they are likely already being captured through joint ventures and coordination agreements. Those that still exist would most likely be distributed to rate payers by regulatory decisions. Managerial incentives of the bidder are countered by the desire of target management to remain independent. Potential gains to the financial community from a wave of mergers are large, but the regulatory process provides a dampening of this otherwise strong incentive. Copyright 1990 by Kluwer Academic Publishers

Suggested Citation

  • Ray, Dennis J & Thompson, Howard E, 1990. ""Fifty in Five": The Prospects for Merger in the Electric Utility Industry," Journal of Regulatory Economics, Springer, vol. 2(2), pages 111-128, June.
    • Handle: RePEc:kap:regeco:v:2:y:1990:i:2:p:111-28
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    Cited by:

    1. Patricia Bachiller & Giuseppe Grossi, 2012. "Great expectations but poor results: financial and social performance of the T oscana Energia merger," Public Money & Management, Taylor & Francis Journals, vol. 32(1), pages 69-74, January.
    2. Kwoka, John & Pollitt, Michael, 2010. "Do mergers improve efficiency? Evidence from restructuring the US electric power sector," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 645-656, November.
    3. 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.
    4. Ralph Sonenshine, 2016. "Effect of Utility Deregulation and Mergers on Consumer Welfare," Working Papers 2016-08, American University, Department of Economics.
    5. Ohsung Kwon & Sangmin Lim & Duk Hee Lee, 2018. "Acquiring startups in the energy sector: a study of firm value and environmental policy," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1376-1384, December.
    6. Evgenii Monastyrenko, 2016. "Cross-Border M&As and Eco-Environmental Performance of European Energy Utilities," FIW Working Paper series 169, FIW.

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