Impact of merger on shareholder value-a study on select banks

Mergers and acquisitions in the Indian banking industry are the revolution strategies adopted to restructure the banking sector in the recent years. These were done to improve the shareholder value through expansion of the business. The study is an effort to analyses the change in shareholder value before and after merger of the select banks. The financial parameters used in the study to analyse the shareholder value through economic value added tool are net operating profit after tax and cost of capital employed in the banking business in the select banks. The study covers five scheduled commercial banks which were involved in acquisition of other banks during 2006–07 to 2010–11. Required data were collected from the capitaline plus database. It was found that the post merger, there is increase in the economic value added of the banks under the study.