THE ROLE OF MERGERS AND ACQUISITIONS IN CORPORATE GROWTH AND DEVELOPMENT (CASE: Skype Bank Nigeria Plc.)

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ABSTRACT

This research work focuses on the problem encountered by companies that have merged and the ones that acquired other companies. It also covers economic merits and implication of mergers and acquisitions, how companies seeking for mergers and acquisitions of which others to find a suitable partners and how they proceed in the merging process. As deals are becoming more complex and technology, people supporting it are becoming keys to mergers and acquisitions process. Planning of information and communication technology in stages of the integration process is vital to the realization of benefits of a mergers and acquisitions process. This statement is substantiated through review of literature from arcade i.e. as well as practitioners and case exemplification of the financial services organization.


The research method used was secondary data, statistical method in which chi- square and null hypothesis was used to gain the final result. From the questionnaire admitted to the staffs of the case company, it shows that most of them are used to mergers and acquisitions in one way and another, they are sure of job secured and not afraid of merger and acquisitions. It shows that mergers and acquisitions techniques enhances organizational survival in a distressed economy, it has also limited the severity of competition by increasing the company’s markets power.


TABLE OF CONTENTS

ABSTRACT
ABBREVIATION

1 INTRODUCTION

2 MERGERS AND ACQUISITIONS
2.1 Mergers and Acquisitions defined
2.2 Importance of Mergers and Acquisitions in Business
2.3 Types of Mergers and Acquisitions
2.3.1 Horizontal Mergers and Acquisitions
2.3.2 Vertical Mergers and Acquisitions
2.3.3 Conglomerate Mergers
2.3.4 Types of Mergers
2.4 Regulation and Regulatory Bodies for Mergers and Acquisitions in Nigeria
2.4.1 Legal Implication
2.4.2 Procedures in Mergers and Acquisitions Deals

3 MOTIVES OR REASON ATTRIBUTABLE TO THE OCCURRENCE OF MERGERS AND ACQUISITIONS
3.1 Mergers Games
3.2 View of the Predator Company Shareholder
3.3 Valuation of Shares for Mergers and Acquisitions Purpose
3.4 Importance of Share Valuation
3.5 The Contested and Uncontested Offer in Mergers / Acquisitions
3.6 Insight into the Merger among Formal PB, EIB, BBRB and CB.
3.7 Summary of Mergers and Acquisitions in 1996

4 RESEARCH METHODOLOGY
4.1 Research Design
4.2 Population
4.3 Research Questions
4.4 Determination of Sampling Techniques
4.5 Method of Data Collection
4.6 Data Analysis and Interpretation

5 SKYPE BANK AND RESEARCH FINDING
5.1 Testing of Hypothesis
5.2 Analysis of Hypothesis 1
5.3 Analysis of Hypothesis 2

6 CONCLUSION AND RECOMMENDATIONS
REFERENCES
APPENDIX


1     INTRODUCTION




Mergers are processes whereby two or more previously autonomous companies come together under a common control. Mergers are important features of corporates structural changes. They have played an important role in the external growth in most of the leading countries in the world. In the United States of America, mergers occurred for the first time between 1890 and the Second World War and contin-ued until present day. Nigeria has experienced series of mergers and acquisitions processes due to the promulgation of Banks and Other Financial Institutions Degree (BOFID) of 1997, which bring about incensement in the initial deposits of bank and insurance institution. Nigeria is a developing economy which is characterized by a developed plan and projects. Recourses are underutilized, and also the po-litical environment creates room for constant change of policies. Resources are not adequately man-aged for proper development. In the early seventies, the Nigerian economy was very buoyant due to the poor management, the collapse of economy was very sharp which had resulted in many adjust-ments programs stating from the 1990s.


According to Nation newspaper (Jan 2006), the Nigerian Government under the regime of President Olusegun Obasanjo increased the initial deposits of banks to a minimum of twenty-five billion Naira (N25b) this pronouncement made many banks to result into mergers and acquisitions processes to be able to raise the specified capital. (www.skypebank.com).


Among the banks is Skye Bank which consists of former: Eko International Bank merged with Prudent Bank, Reliance Bank, Bond Bank and Cooperative Bank to form what is known as Skye Bank today in Nigeria. About two-third of the large public corporations in the United State of America have had about 11800 proposal for amalgamation of cooperate bodies with high income between the years 1976 and 1986. According to Hampton 1989, the kind of mergers that existed within the economy involved great deals of negotiation and bargaining between companies who are planned to merge.


Various literature relating to mergers, acquisitions and takeover often cause confusion in the minds of observers. This is because economic activities are conducted in a society with implicit norms, values, tradition and explicit stated laws. Most of the decisions on mergers are regulated by the explicit legal framework. Financial specialists must have a way of evaluating mergers to be able to perform the role of finance mergers, analysts or executives frame work or method of analysts in which a specialist may be trained. These frame works will differ from one sector of the economy to the terms of their assump-tions, scope, nature, complexity and method in finance literature.


In Nigeria mergers and acquisitions have been creating waves for the past few years due to the depres-sive state of economy. Many companies were unable to continue their operations because of the bad state of economy and the adverse effect on the enterprises. Therefore, in some sectors of the economy, there has been government intervention with decrees to stabilize the economy of some companies who have negotiated for mergers talks as a means for survival. Mostly affected in the mergers talks are banking and insurance groups, which are unlike the conglomerates who easily settle down for integra-tion.


However mergers and acquisitions are means of survival in a distressed economy involving corporate and strategic management motives on amalgamation of one company with another. Mergers and acqui-sitions have been used in so many cases to achieve company growth and expansion policies. (Akanlokhor G, 1987).


This research work focuses on the problem encountered by companies that have merged and the ones that acquired other companies. It will also cover economic merits and implication of mergers and ac-quisitions, how companies seeking for mergers and acquisitions of others to find a suitable partner and how they can go about the merging process.


This research work will discuss briefly about:

·         The possible valuation to be employed in mergers or acquisitions.

·         The legal implication and regulations put in place to control the method of mergers and acquisi-tions.

·         The position of necessary procedures to be followed.


These will try to lay down empirical evidence to buttress or disprove originally held notion about mer-gers and acquisitions. This study will also base its scope on three different sectors of the economy. The sectors are: Banking, Insurance and Conglomerate sector. This research study will base its scope on Airport Road, Mafoluku branch of Skye bank.

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