Value Creation in Mergers and Acquisitions: An Empirical Study of the Upstream Oil and Gas Industry from 2002-2016

Caroline Inger Anker-Ladefoged & Nanna Hungeberg Pedersen

Student thesis: Master thesis


This paper examines value creation and value drivers for upstream oil and gas producers acquiring or merging with industry-related targets over the time period 2002-2016. We find that upstream oil and gas acquirers earn a significant average cumulative abnormal return of 0.92% upon the announcement of the M&A, while significant negative average abnormal returns are observed one, two and three years respectively succeeding the announcement date. The discrepancies between the short-term and longterm event results can be explained by either methodological problems of isolating the effect for the long-term study, systematic misinterpretation of M&A value potential by investors, or destruction of value by practitioners throughout the post-integration process. We seek to uncover specific M&A value drivers and find supportive evidence that the acquisition of unlisted targets is more valuable relative to listed targets. Additionally, we find weaker support for acquirer size effects, and suggest that there may be greater value attributed to acquisitions occurring in upsurge periods of merger waves. There is no evidence of statistical significant differences of cross-border relative to domestic deals, cash-payment relative to other payment methods and geographic origin of acquirers in driving abnormal performance.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final ThesisMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2017
Number of pages141