The Strategic and Financial Impact of Green M&A: A Comparative Analysis of Sustainability-Driven Acquisitions

In light of accelerating climate change and increasing regulatory and stakeholder pressure, sustainability has evolved from a peripheral concern into a core component of corporate strategy. Against this backdrop, Green Mergers and Acquisitions (Green M&A) have emerged as a strategic instrument for firms seeking to align financial performance with environmental and social objectives. This thesis examines the strategic motivations, financial implications, and sustainability outcomes of Green M&A in comparison to traditional M&A transactions. Building on established neoclassical and behavioral merger theories, the study adopts a systematic literature review structured around six key phases of the M&A process: (1) strategic motivation and target selection, (2) valuation and bid premiums, (3) payment method and financing model, (4) market reaction and investor sentiment, (5) long-term financial performance, and (6) sustainability impact. To complement the theoretical analysis, the research incorporates a qualitative case study of eight Green M&A transactions in the German renewable energy sector, thereby addressing a gap in the predominantly US- and China-focused literature. The findings indicate that Green M&A differs from traditional M&A in several fundamental ways. Strategically, sustainability considerations increasingly shape target selection, legitimacy-building, and long-term transformation goals. Financially, while valuation and payment structures often resemble traditional mechanisms, ESG alignment and reputational factors significantly influence bid premiums and investor reactions. Short-term capital market responses tend to be positive when ESG integration is perceived as credible, whereas long-term financial performance appears contingent upon effective post-merger integration and genuine sustainability commitment. The case study evidence further demonstrates that Green M&A can contribute substantially to emissions reduction, renewable capacity expansion, green innovation, and access to sustainable finance. Overall, the thesis concludes that Green M&A represents a structural evolution of corporate acquisition strategy, extending beyond efficiency and synergy considerations toward legitimacy, resilience, and sustainable value creation. However, the realization of both financial and environmental benefits depends critically on authentic ESG integration, governance quality, and strategic coherence.