Buy Dec23 RWE GR 44 call, sell Dec23 RWE GR 38 put for 0.05 points (12bps vs. 40.6 spot)
Could there be a mega merger in renewables in 2023?
European oil majors have done well this earnings season. Oil prices remain high as the Ukraine war continues into a second year, and it could drag on. The oil majors have ‘made hay while the sun shines’ and are increasingly long cash.
Meanwhile, they are also slowly making their business models greener. European oil majors were buyers in half of the M&A in renewables last year. Most notably, BP acquired Archea Energy, the leading US operator of renewable natural gas, for USD 4.1 bn. In this note we look at the possibility/likelihood of bigger mergers and try to identify some likely targets. We like RWE the best because we feel it best fits the bill, but also because in the absence of any M&A action it still looks cheap to us.
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