Bigger is not always better in Europe's utility sector where there is no proven link between size and profitability, according to research published today.
Independent analysts Datamonitor said proposed deals to combine some of the continent's biggest energy utilities would not necessarily benefit shareholders or consumers.
UK-based Datamonitor said its findings, based on analysis of 100 European utilities, should influence the way that markets and consumers view mergers such as German company E.ON's bid for Spain's Endesa.
"Many mergers and acquisitions are defended by CEOs and governments alike on the basis of the apparent synergies and additional value that these proposed business combinations will generate," Datamonitor utilities analyst Anton Krawchenko said.
"[Our] research, however, shows that there is no relationship between the size of a utility, and its profitability."
But mergers combining pure gas utilities and pure power utilities could create extra value, he said.