FINDINGS

1. Post- liberalization, most Indian business houses are undergoing major structural
changes, the level of restructuring activity is increasing rapidly and the
consolidations through M&A have reached every corporate boardroom.

2. Most of the mergers that took place in India during the last decade seemed to
have followed the consequence of mergers in India corroborate the conclusions
of research work in U.S. with most of the M&A are taking place in India to
improve the size to withstand international competition which they have been
exposed to in the Post-liberalization regime.

3. The M&A activity is undertaken with the objective of financial restructuring and
to avail of the benefits of financial restructuring. Nowadays, before financial
restructuring, it has become a pre-requisite that companies need to merge or
acquire. Moreover, financial restructuring becomes easier because of M&A. the
small companies cannot approach international markets without becoming big
i.e. without merging or acquiring.

4. Market capitalalisation of a company sometimes is found to be going up or down

without any corresponding change in the EVA and MVA since the stock may be
strong because of the general bullish scenario in the market, s is observed in most
of the cases in our study.
 Conclusions

 The mergers have definitely created value to the shareholders.

 The shareholders of the target company have benefited the most. As far as the
acquiring comp any shareholders are concerned they have not benefited as much as
the target company shareholders but definitely their has been value addition.
 The value created to the Bank of Madura shareholders is evident from the fact that
they have become the shareholders of a company with 2500 creor-market
capitalization form the owners of company with just 100 core-market capitalization.
 The same is the case with the shareholders of Times bank shareholders. The market
price has increased form Rs 24 to Rs 241.
 They market price has increased enormously during the merger period. For instance
the market price has increased form Rs. 69 to Rs.177 during the merger period in case
of SBI Bank and Bank of Madura merge. Well this might be because of the success
of the HDFC Bank and Times bank merger in 1999. The investors might have
attached positive hopes with this merger also.
 There is constant increase in the market price of HDFC in the post merger period
whereas in case of SBI Bank the market price has decreased in the post merger
period. In of the reasons might be that the expectations attached with the SBI Bank
and Bank of Madura merger were high owing to the success of the former merger that
is merger of HDFC Bank and Times bank meager. But according to the law of
averages, after a huge unnecessary increase into he market price the market is bound
to correct ad s result of which there is a fill in the market price both shares after that.
The same was the case with SBI Bank an bank of Maadura merge. The market over
estimated the value of the firm which it was bond the correct, the result of which is
the fall in market prices.
 In a nutshell if we take into consideration all the parameter including the market price
of the shares, we can see that in the post merger period all have shown a positive
result that means to say all have increases in absolute terms.
 SUGGESTION
SBI Bank was originally promoted in 1994 by SBI limited, an Indian financial
institution, and was its wholly owned subsidiary. SBI was formed in 1955 at the
initiative of the World Bank, the Government of India and representatives of the Indian
industry.

The principal objective was to create a development financial institution

for providing medium-term and long-term project financing to Indian businesses. In the
1990s, SBI transferred its businesses from a development financial institution offering
only project finance to a diversified financial services group offering a wide variety of
product and services, both directly and through a number of subsidiaries and affiliates
like SBI Bank. In 1999, SBI became the first Indian company and the first bank or
financial institution from non-Japan Asia to be listed on NYSE.

After consideration of various corporate structuring alternatives in the

context of the emerging competitive scales in the Indian banking industry, and the move
towards universal banking, the management of SBI and SBI Bank formed the view that
the manager of SBI with SBI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the SBI group’s universal
banking, strategy.

The merger would enhance the value for SBI shareholders through the merged entity’s
access to low-cost deposits, greater opportunities for earning fee-based income and the
ability to participate in the payment system and provide transaction-banking services.

The merger would enhance value for SBI Bank shareholders

through a large capital base and scale of operation, seamless access to SBI ’s strong
corporate relationship built up over five decade, entry into new business segment, higher
market share in various business segment, particularly fee-based services, and access to
the vast talent pool of SBI and its subsidiaries.

In October 2001, the board of director of SBI and SBI Bank

approved the merger of SBI and its two wholly owned retail finance subsidiaries SBI
personnel financial services limited and SBI Bank.

The merger was Approved by shareholder of SBI and SBI Bank in January
2002, by the high court of Gujarat at Ahmadabad in April 2002.Consequent to the
merger, the SBI group’s financing and banking operation, both wholesale and retail,
have been integrated in a single entity.