CIA 1

Mergers and Acquisitions

Team Member
Harsh Verma 20212417
Devraj Pandit 20212414
Trideep Basu 202124158
Vedant Singh Daramwal 20212460
 ICICI Bank began as a wholly owned subsidiary of ICICI
Limited, an Indian multinational banking and financial
services corporation. In the areas of investment banking, life
and non-life insurance, venture capital, and asset
management, ICICI Bank offers a wide range of banking
products and other financial services to both corporate and

Company
retail customers, which they distribute through a
variety of channels and specialized subsidiaries.

Background
The Bank of Rajasthan was an Indian private sector bank
founded in Udaipur in 1943 with an
initial capital of Rs.10.00 lakhs. With revenue of Rupees 344.83
crore, it reported a net loss of
Rupees 44.7 crore for the quarter ending December 2009.
 Significance of
M&A in Sector
The branch network will grow by around 25%
and will strengthen the bank's position.
Stronger foothold in states like Punjab,
Haryana, and Kerala, and capacity for capital
market lending.
Expansion by opening more branches.
Reduction in the cost incurred for setting up
a branch
Motives of the Merger

Consolidate market Leadership

To generate CASA Strenghten Corporate Governance
More Branches Lowering Lending Charges
Increase Fee Income
JUSTIFICATION OF M&A
Share exchange ratio
The Board approved a share exchange ratio of 25 shares of ICICI Bank
for 118 shares of Bank of Rajasthan, which works out to one ICICI Bank
share for every 4.72 Bank of Rajasthan shares

Enhance the network of ICICI Bank

The proposed amalgamation will substantially enhance ICICI Bank’s
branch network

Growth opportunities
The merger will combine Bank of Rajasthan’s branch franchise with ICICI
Bank’s strong capital base.
COMPARATIVE ANALYSIS OF PRE AND POST
FINANCIAL SITUATION OF CHOSEN M&A
Liquidity Ratio.
a) Current Ratio- Increase by 20%. show ability
to pay debt within a year.
b) Quick Ratio- Financial Position Improved.
Difference between pre and post is 3.5.

Leverage Ratio
a)Debt to equity Ratio- The post merger it
became -1.46. Indicated more leverage.
b) Interest Coverage Ratio- Interest coverage
ratio is at -23.

Profitability Ratio
All profit ratio where positive.
Net profit Margin Improved, ROE and ROA
positive & Increase in EPS post merger
Graphical representation
of Ratio Change
Major Challenges and Issues faces
in the process of chosen M&A

1. Tech Integration : different banks using different technological

platforms and having various geographic reach.

2. Human Resource : Banks are merged only on papers but their

people and culture don’t.

3. Other Challenges
Decision Making
Provisions
Reason Contributing Towards Success
or Failure of Choosen M&A
Heavy loss incurred by Bank of
Rajasthan.

The strong financial position of ICICI

Bank with a good profit.

The merger has helped Bank of

Rajasthan to become top three banks
of Rajasthan in terms of total deposit
and number of customers.
 1. Increase Goodwill

BENEFITS OF 2. Human Resource

MERGER AND
ACQUISITION
3. Exploring New Market

4. Reduced operational cost and Increased

Efficiency
 Conclusion
The result of post financial performance revealed a significant
improvement in the bank's different ratios both before and after the
merger. ICICI understands how to take advantage of synergy. It can also be
claimed that the company benefited from the post-merger impact or
synergy benefits.

As a result, the main goal of the acquiring firm's management (ICICI bank)
in the post-merger phase was to focus on this underlying issue in order to
improve the merged entity's performance. The prices of both ICICI bank
and the Bank of Rajasthan have fluctuated during the merger negotiating
phase.