ICICI Bank-Bank of Rajasthan Merger: An Analysis of Strategic Features and Valuation

International Journal of Marketing, Financial Services and Management Research, July-September 2012

18 Pages Posted: 21 Jul 2012

See all articles by Sony Kuriakose

Sony Kuriakose

Nirmala College, Muvattupuzha

M. S. Senam Raju

Indira Gandhi National Open University (IGNOU) - School of Management Studies

G. S. Gireesh Kumar

Nirmala College - Department of Commerce

Date Written: July 20, 2012

Abstract

ICICI Bank-Bank of Rajasthan merger is the seventh voluntary merger in Indian banking sector, u/s 44A of the Banking Regulation Act, 1949. This is the ICICI Bank’s fourth acquisition after Sangli Bank. The background of the merger can be traced to the regulatory intervention of SEBI and RBI on Bank of Rajasthan. The present case discusses mainly three issues related to the merger. Firstly, the study focuses on strategic similarities of the merging entities as the merging partner’s strategic similarities and relatedness are significant in the synergy creation. The relatedness of the strategic variables has a key impact on the bank performance. Strategic Similarity Index is used to analyze the probable impact of merger on the post merger performance. Secondly, a factual analysis on short-term price movements after the merger announcement and shareholding pattern changes has been made. Thirdly, the present paper analyses the adequacy of swap ratios using Contribution analysis and Accretion/dilution analysis. The study assumes that balance sheet resource allocation is the indicator of the strategic focus of the bank.

Keywords: Bank Acquisitions, Strategic Similarity Index, Valuation, Comparable Contribution Analysis

JEL Classification: G34

Suggested Citation

Kuriakose, Sony and Raju, M. S. Senam and Gireesh Kumar, G. S., ICICI Bank-Bank of Rajasthan Merger: An Analysis of Strategic Features and Valuation (July 20, 2012). International Journal of Marketing, Financial Services and Management Research, July-September 2012, Available at SSRN: https://ssrn.com/abstract=2114332

Sony Kuriakose (Contact Author)

Nirmala College, Muvattupuzha ( email )

Nirmala College
Muvattupuzha, Kerala
India

M. S. Senam Raju

Indira Gandhi National Open University (IGNOU) - School of Management Studies ( email )

New Delhi, 110068
India

G. S. Gireesh Kumar

Nirmala College - Department of Commerce ( email )

Muvattupuzha, Kerala 686 661
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,974
Abstract Views
6,529
rank
9,581
PlumX Metrics