Mergers as an alternative for energy use optimization: evidence from the cucumber greenhouse production using the Inverse DEA approach

This paper investigates the merits of Mergers & Acquisitions (M&A), as strategic decisions, in optimizing energy use. The impact of M&A decisions on reducing energy consumption and, as a result, GHG emissions, are evaluated through the inverse data envelopment analysis (DEA) approach. Moreover, a new index, identified as synergy merge index (SMI), is developed to measure the merger's synergetic effect and determine accordingly the most productive merger plan.Although the proposed methodology could be applied in any sector where energy use optimization is of interest, the investigations were carried out in the greenhouse (GH) production through a sample of 30 GH farms from Al-Batinah region, Oman. The standard DEA model declared 40% of the GH farms efficient, with an average technical efficiency of 0.872, yet, the inverse DEA results revealed that nearly 45% of the productive mergers involve at least one efficient GH farm, i.e., energy gains are still possible even if the merging farms are presumably efficient. The post-merger GH farms showed a substantial potential for energy gains, ranging between 17.56 and 74.47%, on average, with the most significant proportions observed for electricity. The highest notable proportions of energy gains reached 81.26%, 78.13%, 89.74%, 75.60%, 90.36%, and 77.41% for fertilizers, machinery, water chemicals, electricity, and labor, respectively. The most productive merger plan revealed that GH farm mergers farms can improve the energy savings by a factor of more than 4, where the share of electricity represents alone 94.92%, followed by 3.83% for fertilizers and only 0.60% for water. These findings unequivocally demonstrate that mergers can have a considerable impact on enhancing energy efficiency, which, along the way, provides strong support for the implementation of local policies that endorse mergers as a viable strategy to achieving optimal energy utilization.