Impact of Mergers & Acquisitions on Operating Performance, Financial Performance & Shareholders Wealth: A Case Study of Centurion Bank and Bank of Punjab Merger

The mergers and acquisitions have acquired a prominent position in the corporate sector throughout the world. Mergers and acquisitions (M&A's) is one of the important strategies used by the corporate entities to attain growth and diversification, to enjoy operational synergy and to conquer new markets. The global integration has further forced the business organizations to follow the policy of mergers and acquisitions to survive and grow. The Indian corporate sector has also shown keen interest in this new business strategy. There has been an increase in both the number and size of mergers and acquisitions in the Indian corporate sector. However, in all the years, banking sector has emerged as one of the most opportunistic sectors in the sense that good number of M&A's have taken place in this sector. The merger of Centurion Bank and Bank of Punjab is regarded as one of the important merger deals in the Indian corporate sector. Keeping in view the size and significance of this merger, an effort has been made to assess the operating, financial performance and shareholders' wealth of this merger. To test the hypotheses that the merger has a positive impact on the operating and financial performance as well as on the shareholders wealth of both the financial institutions, financial ratios and relevant statistical tools have been used. The study is mainly based on the secondary data which has been collected from the annual reports available on various official websites. The study has revealed an insignificant positive impact on the shareholders wealth as well as on the operating & financial performance of the merging entity.