The document discusses mergers and acquisitions, providing details about the recent merger between State Bank of India (SBI) and five of its associate banks. It defines a merger as occurring when two similarly sized companies agree to combine to achieve together what they could not individually. An acquisition differs in that one company gains control of another but they may remain separate. The SBI merger was an exchange of shares to combine SBI with State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad, and State Bank of Patiala. Potential pros included increased market share and competitive ability globally, while cons involved increased costs and potential cultural clashes
3. WHAT IS A MERGER?
• A merger is a transaction that result in the
transfer of ownership and control of a
corporation.
• When one company purchases another
company of an approximately similar size. The
two companies come together to become one.
• Two companies usually agree to merge when
they feel that they can do something together
that they can not do one their own.
5. WAYS OF MERGER
A merger can take place in following ways:
By purchasing of assets
By purchase of common shares
By exchanging of shares for assets
By exchanging of shares for shares
7. What is an Acquisition
• An Acquisition may be an act of
acquiring effective control by one
company over assets or management
of another company without any
combination of companies.
• Companies may remain independent
and separate, but there may be
change in control of companies.
9. MERGER
• Retain name & brand
• Mutual benefits
• NO loss of cooperate culture.
• Responsibilities can be
assigned but there are
leadership problems.
• Nothing altered in employee
behaviour
ACQUISITION
• It can’t retain
• *Saving from the loss
• Usually loses cooperate culture.
• Payroll & responsibilites equally not
distributed
• Negative consequences on the
Employee.
10. SBI MERGER
It is a merger of State Bank of India (SBI) with
five of its associate banks i.e
State Bank of Bikaner and Jaipur (SBBJ)
State Bank of Mysore (SBM)
State Bank of Travancore (SBT)
State Bank of Hyderabad (SBH)
State Bank of Patiala (SBP)
And Bharatiya mahila bank
11. SBI MERGER
Exchange of shares
• SBI will give 28 of its shares for every 10 shares held of State
Bank of Bikaner and Jaipur.
• 22 of its shares for every 10 shares held of State Bank of
Mysore.
• 22 of its shares for every 10 shares held of State Bank of
Travancore.
• SBI will give 4,42,31,510 shares with face value of Re. 1 for
every 100 crore equity shares of Bhartiya Mahila Bank.
12. PROS OF SBI MERGER
• It secures a place in top 50 banks in the world
• It can compete with International Banks in financing large
infrastructure projects
• SBI's asset base will now be five times larger than the
second-largest Indian bank, ICICI Bank
• Largest bank by asset ranking
13. PROS(conti..)
• Strengthens the capital base of both the merged and
mergee banks. They can compete well within the Banking
industry
• Getting economies of scale and reduction in the cost of
doing business.
• After the amalgamation it can withstand the strong
competition from private sector banks and can accumulate
more resources to channelize trained manpower across its
branches
14. PROS(conti..)
• The merger of SBI and its associate banks will result in the
network increase of SBI and its reach would multiply. i.e
Strong presence in nook and corner of the country.
• Any introduction of new technologies and features by
SBI will uniformly be available to all customers of SBI ,
its associates and subsidiaries
15. CONS OF SBI MERGER
• Immediate negative impact on pension liability provisions
(due to different employee benefit structures) and
harmonization of accounting policies for NPA (non-
performing assets) recognition.
• Not beneficiary for the employees in terms of their experience,
promotions ,hikes
• Post the merger, SBI's employee costs could rise by Rs 23
crore a month
16. CONS(conti..)
• Currently SBI is in lots of debts in terms of NPA whereas
banks like SBH , SBP are in profits. So, there will be an extra
burden on these child banks
• Associate banks have regional flavor and regional focus
compared to nationalistic SBI culture.