Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Key Topics
Merger Trends in the United States and Abroad Motives for Merger Selecting a Suitable Merger Partner U.S. and European Merger Rules Making a Merger Successful Research on Merger Motives and Outcomes
Profit Potential Risk Reduction Rescue of Failing Banks Tax and MarketPositioning Motives Cost-Savings or Efficiency Motive
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e
Mergers as a Device for Reducing Mergers as a Device for Maximizing Competition Managements Welfare Other Motives
Quick Quiz
What is consolidation? Convergence? Why are there so many mergers each year in the financial-services industries? What factors seem to motivate most mergers?
The Most Important Goal of Any Merger Should Be to Increase the Market Value of the Surviving Firm.
Market price per share of stock
t 1
E(D t ) (1 c) t
Where annual expected dividends per share are represented by E(Dt) and c is the opportunity cost of capital
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Merger Premium
As Long as the Acquiring Institutions P-E Ratio is Larger Than the Acquired Firms P-E Ratio, There is Room for Paying Merger Premium.
A Merger Premium is Paid if the Acquiring Banks Shareholders Receive More Than the Current Market Price for Their Stock
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Exchange Ratio
The Number of Shares of Stock Offered By an Acquiring Bank for Each Share of Stock of the Acquired Bank
Dilution of Ownership
Dilution of Ownership Occurs When the Acquiring Bank Offers an Excessive Number of Shares to the Acquired Bank Shareholders. The EPS Will Fall Below its Original Level for the Acquiring Bank When This Happens.
Regulatory Rules for Bank Mergers in the US: Bank Merger Act, 1960
First Major U.S. Law to Bring Merging Banks Under Federal Supervision, Requiring Government Approval to Merge with or Acquire Other Banks
Regulatory Agency Must Give Top Priority to Competitive Effects Mergers with Anti-Competitive Effects May Be Approved if it Can Be Shown That There Are Significant Public Benefits Such As Providing Convenient Services or Rescuing a Failing Bank McGraw-Hill/Irwin
Bank Management and Financial Services, 7/e
National Banks Comptroller of the Currency State Member Banks Federal Reserve State Insured Banks FDIC
Quick Quiz
What factors should a financial firm consider when choosing a good merger partner? What factors must the regulatory authorities consider when deciding whether to approve or deny a merger? When is a market too concentrated to allow a merger to proceed? Does it appear that most mergers serve the public interest?
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.