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Defination of merger:The definition of merger in general and in finance can be stated as follows: In General:"Merger is an absorption of one or more companies by a single existing company." In Finance:"Merger is an act or process of purchasing equity shares (ownership shares) of one or more companies by a single existing company." 3/3/13
Different types of merger:Horizontal merger Vertical merger Conglomerate merger Market Extension Mergers Product Extension Mergers 3/3/13
On October 1, 2004,
IDBI converted into a Banking company (as Industrial Development Bank of India Limited)
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branches in 9 states apart from its Zonal offices at Pune, Mumbai, Kolhapur, Nagpur and Jalgaon. 3/3/13
Products
All the UWB branches have been operating as IDBI BANK LTD branches since 2006.
v
PC-Purchase Consideration
UWB shareholder,
market price,
PC at this price, work out to about Rs 150
crore
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Synergies
Ready Available Market Semi-Urban & Rural market Diversified business Deposit Mix
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181 branches
UWB gave immediate
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Diversified business
IDBI was dominant in Industrial
financing,
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Deposit Mix
IDBI benefited of an improved deposited
mix from,
Impact Of Merger
v Expansion v RBI Policies v Beneficial for depositors of United Western
Bank Limited
v
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capital.
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Cont,d
Employee strength issue. UWB's weaker asset quality had impact on IDBI's financial profile negatively IDBI paid premium of 30%. There will be a cultural difference in terms of integration
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The amalgamation of UWBL with IDBI would support IDBI's growth. It was a good fit for both the banks as they come together. By filling the gaps and upgrading skills of employees the merger can be effective.
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