Impact of Merger Deal on Shareholders’Value Creation: AnInstance of State Bank of India Group


Authors : Rajashree Upadhyay; Dr. Mahesh Kumar Kurmi

Volume/Issue : Volume 6 - 2021, Issue 1 - January

Google Scholar : http://bitly.ws/9nMw

Scribd : https://bit.ly/3q9kgjK

Like other comparable business concerns, shareholders are also pivotal stakeholders of the banking sector and any variation in organic and inorganic growth strategies of banking concerns directly impacts shareholders' wealth of that particular concern.Mergers are mostly used by the banking sector as an inorganic growth strategy to boost their earnings and increase market share. Shareholders' interest is also affected to a large extent by this tie up deal as this type of capital restructuring strategy can increase or decrease their wealth. Thus, to ascertain the impact of bank tie up on wealth of shareholders this interpretation considers State Bank of India’s latest consolidation event which took place on 1 st April 2017 with BharatiyaMahila Bank & its five subordinate banks. Three years prior merger phase attainment (April, 2014 to March 2017) and three years after merger phase attainment (April 2017 to March 2020) of state bank of India is investigated here. All the required data are gathered from secondary sources,namely; CAPITALINE -2000 database and the ultimate conclusion is drawn by using EVA, MVA & SVA approach. The findings of the study clearly reveal the adverse effects of the merger in the immediate term as shareholders' wealth are immediately declined after the merger. But with regard to the sustainable impact of consolidation, the findings suggest that this merger failed to add any significant value to SBI's shareholders' wealth

Keywords : Merger, EVA, MVA, SVA, Banking Sector.

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