It can be defined as a strategy to achieve faster growth, desired capital structure and change in the ownership and control of company. The reasons behind change may be external or internal factors. In the present scenario, business organization undertakes changes to increase their cutting edge over the competition and enhance their leadership positions. It is a fundamental fact of finance that growth and capital employed are two basic drivers of the value of an organization.
On the other hand neither growth nor improvement in ROCK is possible unless the company is under the control of competent, progressive and visionary management. The present paper is an attempt to understand the strategic move of CHIC bank. The case study will veal the motives behind and synergies from such M&A activities. An attempt has been made to analyze, “Is corporate restructuring a tool to enhance the shareholders value”.
Why CHIC Bank has taken such a strategic move and many more questions will be solved from the case study. 192 Mergers and acquisitions in banking sector has become admired trend throughout the country. A large number of public sector, private sector and other banks are engaged in mergers and acquisitions activities in India. One of the prominent motives behind Mergers and Acquisitions in the banking sector is to harvest the benefit of economies of scales.
With the help of mergers and acquisitions in the banking sector, the banks can achieve significant growth in their operations and Meltzer tenet expenses to a considerable extent say Tort example Installation expenses for setting up new branches will be saved. Secondly, the most significant vantage is that it eliminates competition from the banking industry. Proven to be an act of corporate action, mergers and acquisitions in the banking sector has ensured efficiency, profitability and synergy from past many years.