3. Introduction
• Mergers and Acquisitions have become a
popular strategic choice for companies
wanting to grow and expand. Merger is a
combination of two or more companies to
create a new company.
• Acquisitions is taking over of one firm by other
firm by grabing more than 50% of the equity
of target firm.
4. Introduction
• Mergers and Acquisitions are increasingly
common in contemporary business world. It is
through them many businesses seek growth,
profitability and shareholders wealth
maximization.
• This raises an intriguing debate on the impact of
mergers and Acquisitions that is worthy of
sincere attention. Moreover, financial institutions
such as banks are an essential component of
macro economic growth and stability for any
country.
5. Research Problem
• To what extent do Mergers and Acquisitions
impact on financial performance of public
sector banks in India?
6. Selected Variables
• This study has used three dependent variables
which are Return on Assets (ROA), Return on
Equity(ROE) and Net Profit Margin(NPM) to
measure the financial performance of Banks in
terms of Profitability and Shareholder’s
Wealth.
• Additionally, Debt to Equity ratio as
independent variable for regression analysis.
7. Objectives
• To evaluate the effects of pre and post merger
on the financial performance of the selected
banks.
• To examine and compare effect of pre and
post merger on profitability of selected Banks.
• To analyze and evaluate effect of pre and post
merger on Shareholder’s Wealth of selected
Banks.
8. Return on Assets
• Return on Assets : it indicates how profitable a
company is in relation to its total assets. It is
expressed as a percentage by dividing a
company’s Net Income by average total assets.
• The higher the ROA shows the more efficient
and productive company is in using its
resources, while a lower ROA indicates there is
scope for improvement.
9. Return on Equity
• Return on Equity is an indicator of how
effectively and efficiently a company is using
its shareholders wealth to generate profit
through investments.
• ROE is a ratio of Net Income after Taxes
divided by Total Equity Capital.
• Higher ROE indicates that firm is performing
well.
10. Net Profit Margin
• NPM is the ability of firm to earn net profit
through available resources.
• NPM is equal to net income divided by total
revenue.
• Higher NPM indicates that the firm is making
profit either by increasing sales or reducing
costs or a combination of both.
11. Debt to Equity
• It is calculated by using total liabilities and
total equities.
• Merger and Acquisitions tend to change
capital mix of a bank and therefore this
independent variable could be useful in
demonstrating impact on ROA and ROE.
12. Literature Review
Sr.
No.
Author Title & Objective Sample Size &
Technique of
Analysis
Time Period
of the study
Conclusion
1. Jayaraman A.R.,
Srinivasan M.R.,
Arunachalam R.
Impact of merger
& Acquisition on
the Efficiency of
Indian banks : A
pre & Post
Analysis Using
data
Envelopment
Analysis
6 Merged
Banks -Data
Envelopment
Analysis – a
non
parametric
technique.
2004-2011 The effect of
merger &
Acquisition on
the
profitability &
operational
cost of the
merged bank
is not
significant
during initial
three years of
the merger.
13. Literature Review
Sr.
No.
Author Title &
Objective
Sample
Size &
Technique
of Analysis
Time Period
of the study
Conclusion
1. Badreldin
Ahmed,
Kalhoefer
Christian
The effect of
Mergers &
Acquitions
on Bank
performance
in Egypt
10 banks
based on
cross
border
M&A and
Domestic
M&A.
Financial
tools as
technique
of analysis.
2002-2007 Mergers &
Acquisitions
have not had a
clear effect on
the profitability
of banks in the
Egyptian Bnking
Sector. A minor
positive effect
on the credit
risk position.
14. Literature Review
Sr.
No
.
Author Title & Objective Sample Size
& Technique
of Analysis
Time
Perio
d of
the
stud
y
Conclusion
1. Das
Subhas,
Singh
Sonia
Impact of Post merger
and Acquisition
activities on the
financial performance
of banks : a study of
Indian private sector &
public sector Banks.
8 Banks
were
selected for
the study.
Financial
tools and t –
test were
applied in
the study.
2010
-
2016
There is no
improvement in the
current ratio
between pre and
post merger period.
Majority of Banks
don’t have any
impact on Return on
Caiptal employed.
16. Hypothesis
• H1: There is a significance difference between
pre merger and post merger period
profitability of Indian Public sector Banks .
• H2 : There is a significance difference between
pre merger and post merger period
Shareholder’s wealth of Indian Public sector
Banks.
17. Hypothesis
• H1a and H2a: There is a significance difference
between pre merger and post merger period
Return on Assets of Indian Public sector Banks.
• H1b and H2b : There is a significance difference
between pre merger and post merger period
Return on Equity of Indian Public sector Banks.
• H1c : There is a significance difference between
pre merger and post merger period Net Profit
Margin of Indian Public sector Banks.
18. Research Methodology
• Sampling Design: Non Probability Purposive sampling Design.
• Data Collection Method: Secondary Data from published Annual reports.
• Sample size: Banks dealing into Horizontal mergers and acquisitions were
only extracted for study. Six such Public Sector Banks which are listed on
Bombay Stock Exchange and National Stock Exchange were selected.
1. State Bank of India
2. Bank of Baroda
3. Punjab National Bank
4. Canara Bank
5. Indian Bank
6. Union Bank of India
• Time period: 2016 to 2021
• Data Analysis tools: Various suitable Statistical Techniques and financial
tools will be used for the study. All the hypothesis will be tested by
employing paired sample T-test and Regression analysis.
