A shareholder value evaluation of the merger between Vestas and NEG Micon

Abstract

The aim of this thesis is to evaluate the merger between Vestas and Micon, specifically concerning the creation of shareholder value. After an evaluation of the reasons behind the merger and how they can create value, a strategic analysis of the company and its surroundings was performed in order to gain knowledge about the company and the micro and macro environmental factors that impact the firm and the industry in which it operates. Moreover, it was necessary to perform an accounting and financial evaluation of shareholder value created to be able to come up with a comprehensive answer to the problem formulation. The Economic Value Added and Market Value Added tools were used for the evaluation. The strategic analysis uncovered interesting findings. The intrinsic nature of the industry makes it dependent on government support due to the fact that sustainable energy sources are more expensive than traditional energy sources. The business environment is characterized by increasing competition intensity which has caused Vestas’ decreasing market shares. The strategy launched in 2005 has been successful in reaching two out of three financial goals, and as a consequence the accounting findings confirm that the merger has not yet created shareholder value in terms of the Economic Value Added tool. When it comes to the financial findings the numbers are showing different results than the accounting analysis. The development in stocks prices has over the five years of analysis created shareholder value from a merger point of view. So even though the analysis presents diverging results the conclusion for this thesis is that the merger has created value for shareholders. The reason for is that the paper is primarily financial and secondary an accounting and strategic thesis. Finally some perspectives have been drawn to hypothetical analyze how Vestas would have performed without the merger.