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Fordham Business Student Research Journal

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Abstract

This paper examines the effects of energy prices on M&A activity in the energy sector from 1991 to 2009. We performed multivariate regression for M&A activity in the energy sector and energy prices controlling other factors that tend to drive M&A activity, such as market activity, GDP, and market returns. We find that oil prices have a significant effect on M&A activity in the energy sector. Natural gas prices have a lesser effect, while electricity prices have no significant effect on M&A activity in the energy sector. In addition, we find that oil prices and natural gas prices significantly affect oil M&A deals, but natural gas has positive coefficients and oil prices have negative coefficients. On the other hand, oil prices and gas prices have no significant relationship to gas and electric deals. The electricity prices have a negative impact on gas and electric deals, largely due to the regulated nature of both electricity prices and gas and electric companies.

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