Value Creation through Mergers and Acquisitions in the Banking Thesis - 1

Value Creation through Mergers and Acquisitions in the Banking Industry-A Case Study of Five Mergers & Acquisitions in Banking Industry-- JP Morgan Merger with - Thesis Example The definitions of the aforesaid variables are given in the research methodology. In each case of these mergers the individual companies became integrated to form a mega giant company. Though we mention these as the examples of merger actually those are the examples of acquisition. But the fact is that none of these five is a case of hostile acquisition rather all of these can be termed as friendly acquisition. While merger took place the existing shareholder of the merging companies retain their own position regarding the share they hold and the position to which they belong. Regarding the positions of the shareholders of both of the companies in the pre contract and the post contract situation here the acquisition becomes synonymous to merger. Generally the merger and acquisition takes place for various reasons: some of the reasons are beneficial for the shareholders. In these cases the major objective of the merger of each partnership was to capture the market as much as possible. If the mergers become successful enough to generate profit the shareholders prem ium would raise and hence the price of share and equity would rise consequently. There are two major benefits that a shareholder may enjoy. I. if the amount of dividends rise then the shareholder is benefited as he gets higher return on the same amount of money. If the premium on the share rises then the shareholder is better off. II. If the price of the share rises due to the merger then the shareholder would enjoy a capital gain. That is also a benefit that is brought about by merger. But if we consider an increase in the part of undistributed profit due to merger then we can say that the merger is not beneficial for the shareholders. . For example when a profitable company merges with a loss making company, it use the loss as a tax writes off to offset the