Merger and Acquisitions: A Case Study of ICICI Bank - Bank of Rajasthan

Accounting
Assignment

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ACCOUNTING & FINANCE ASSIGNMENT
Case studY
Name of the Student :
Date : 07th October,2018
Administrator
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Background
Our Study is intended to focus the rationale behind one of the most commonly found practice in
the business world that is Merger& Acquisitions (M&A) along with the identification of the
possible sources of Funds to finance the process. It also makes a deep- rooted analysis of the
financial impact of the entire process by making a comparison of pre and post merger financial
figures and finally whether it succeeds in enhancement of the shareholder’s value or not. In order
to serve our purpose we have selected one of the largest Tech merger of ICICI Bank - Bank of
Rajasthan. The analysis explains the merger that has took place in the last 10 years and what are
the parameters and performance metrics that are seen while doing the merger. Since this is one of
the financial news, it is always expected that it would trigger the stock market when the news is
made public. In the given case as well, the reaction of the stock market and the prospective
investors has been captured in the report towards the end.
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Contents
Cover Page...................................................................................................1
Background...................................................................................................2
Introduction..................................................................................................4
Justification for the choice of the Company and Sector...............................................5
Rationale & Theory of Merger and acquisitions.......................................................6
Examination of the Financing of the Merger and acquisitions.......................................7
Financial Performance pre and post merger acquisitions.............................................8
Impact of Financing announcement......................................................................9
Conclusion................................................................................................10
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Introduction
The practice of consolidation of companies is known as Merger and acquisition, that consists of
two words, first being merger, means combining two companies to form as one and single
company, whereas acquisition refers to the taking over of one company (Vendor company) by
another company (Purchasing Company). The basic objective behind our study is to cover the
various aspects of M&A such rationale behind M&A, how the justification for the M&A should
be provided after making a thorough analysis of pre and post merger effect, what are the various
sources of Funds to facilitate the process and finally how the final outcome of the entire process
results into the overall enhancement of shareholder’s value. In order to justify our study we have
selected the case study approach along with the questionnaire method by referring the merger of
ICICI Bank - Bank of Rajasthan. In this modern era of Banking Industry evidencing the dynamic
change in the financial world perhaps can provide the best evidence to justify the process of
acquisition.
In order to facilitate our study the major sources of financial data gathered are Annual reports of
both of the banks, website of the banks along with the relevant publications of the News journals.
The methodology selected here is the use of various financial ratios and common size financial
statements have been used to justify our study. All the relevant financial figures presented are the
parts of the secondary data collection.
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The ICICI Bank, acquirer was formed in the year 1955 with the initiatives taken by the
government of India, representatives of the Industries along with the World Bank collaboration
in order to serve the long and medium term project Financing to the Indian Business. A major
transformation was noticed in the year 1990 when it converted itself into a developmental
financial institution by offering services directly as well as through its various subsidiaries.
The major reason behind selecting the merger of ICICI Bank - Bank of Rajasthan is nothing but
to bring out the Instance of compulsory merger option exercised by the various regulatory
authorities on the promoters of the Bank of Rajasthan since 2009 as there were lot of evidences
showing severe noncompliance by the Bank of Rajasthan. Because of which no option left for
the promoters other than to restructure the same. This case study is also an indication towards the
fact that Indian Banking Industry still have a strong enough regulatory system for its future
survival.
Justification for the choice of the Company and Sector
The major reason behind choosing the merger of ICICI Bank- Bank of Rajasathan to prove its
worth for our study is enumerated as follows.
1. This merger is the best evidence to establish the power of regulatory intervention in
the Indian Banking Industry to strengthen the Indian Banking system
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