Vol. 2, Issue 1 (2017)
A case study on mega merger of SBI with its five Subsidaries
Author(s): D Satyanarayana, Dr. GV Subba Raju, Dr. S Krishnamurthy Naidu
Abstract: Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations or their operating units are transferred or combined. As an aspect of strategic management, M&A can allow enterprises to grow, shrink, and change the nature of their business or competitive position. From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas an acquisition occurs when one entity takes ownership of another entity's stock, equity interests or assets. However, from a commercial and economic point of view, both types of transactions generally result in the consolidation of assets and liabilities under one entity, and the distinction between a "merger" and an "acquisition" is less clear. On 15 February 2017, the Union Cabinet approved a proposal to merge five SBI associate banks with SBI. In this present case study, Merging of five state bank subsidiary banks into the parent bank SBI is named after Mega-merging. The present paper explores the economic and political pull and push factors cause merger of SBI associate banks into SBI. The paper also attempted to evaluate prospects and consequences of Mega-merging.