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Subtitle
CONTENT
• MERGER
• REASONS, WAYS & TYPES OF MERGER
• ACQUISITION
• SBI MERGER
• PROS AND CONS OF SBI MERGER
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.
REASONS OF MERGER
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
TYPES OF MERGER
• Horizontal
• Vertical
• Conglomeration
• Market Extension
• Product Extension
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.
WHAT IS AN ACQUISITION
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.
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
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.
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
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
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
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
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.
BIBLIOGRAPHY
• https://allaboutdescriptive.blogspot.in/2016/07/pros-cons-of-sbi-
associate-merging-with.html#!
• http://www.livemint.com/Industry/mf507dGEvv1gCGRknnY9GM
/SBI-merger-with-five-associate-banks-from-1-April.html
• http://www.thehindubusinessline.com/portfolio/firm-calls/sbi-
buy/article9625530.ece
• http://www.businesstoday.in/sectors/banks/five-associate-banks-to-
merge-with-sbi-from-april-1/story/246918.html
Merger and Aquisition

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Merger and Aquisition

  • 2. CONTENT • MERGER • REASONS, WAYS & TYPES OF MERGER • ACQUISITION • SBI MERGER • PROS AND CONS OF SBI MERGER
  • 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
  • 6. TYPES OF MERGER • Horizontal • Vertical • Conglomeration • Market Extension • Product Extension
  • 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.
  • 8. WHAT IS AN ACQUISITION
  • 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.
  • 17. BIBLIOGRAPHY • https://allaboutdescriptive.blogspot.in/2016/07/pros-cons-of-sbi- associate-merging-with.html#! • http://www.livemint.com/Industry/mf507dGEvv1gCGRknnY9GM /SBI-merger-with-five-associate-banks-from-1-April.html • http://www.thehindubusinessline.com/portfolio/firm-calls/sbi- buy/article9625530.ece • http://www.businesstoday.in/sectors/banks/five-associate-banks-to- merge-with-sbi-from-april-1/story/246918.html