Impact of SBI & SBT Merger Events on Shareholders’ Wealth
Keywords:
Mergers & Acquisitions, SBI, SBT, shareholders’ wealth, event studyAbstract
This study is an attempt to analyse the impact of merger in the banking sector of India. The State Bank of India (SBI) is the largest bank in the Indian banking system. In the year 2016, SBI announced its proposal to merge with it’s five associate banks. It was one of the largest bank mergers in the country. The central cabinet provided approval to this merger in the month of February 2017. Hence the study focuses on how these announcements influenced the share price of SBI and SBT, the stock exchange, and whether it impacted the valuation of the merged entity. It also compares the impact of the announcement on the wealth of shareholders in both the time periods. Event analysis was used to arrive at findings and conclusions. The event of stock exchange announcement resulted in increased return to SBI and SBT investors only for limited days. The event of cabinet clearance did not make any significant influence on SBI and SBT stock prices and investor return. The stock market during the event window was quite efficient, as the abnormal return (AR) during this period is not significant.
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