MERGERS AND ACQUISITION- A CONCEPTUAL DELIBERATION IN INDIAN CONTEXT

The merger of the three public sector banks- Bank of Baroda, Vijaya Bank and Dena Bank has raised a lot of curiosity towards consolidation process through mergers like never before. The reason being firstly it is directly related to public.

- Rakesh Bhootda

Introduction

All the three banks hold an illustrious history of more than 100 years with billions of people as customers in its fold. Secondly, while mergers and acquisition in corporate sector is a continuous process, the merger of three public sector banks is a major event in banking history in last 50 years after the nationalization of banks in 1969.

Merger & Acquisition- The Indian Context

There has been a continuous process of consolidations in any evolving market. Once a market is allowed to grow, many companies join the bandwagon to take the advantage of business opportunities, however as the market advances to maturity, it discards players with irrelevant business model, competencies and scaling plans. We may see the Indian mobile network market for example. You could probably remember the name of many network providers who entered in the growing Indian market when India embraced wireless communication technology in last decade like Ericsson, AT&T, Spice, MTS, Virgin, Reliance (Anil Ambani endeavor), Tata Teleservices and so on.

These companies today are nowhere on horizon. As Indian mobile network market entered in maturity stage from growing stage, only fewer players with deep pockets, competencies, scaling, technology and eager to serve customers are here to stay, thus now only four players are left in game i.e. Vodafone, Airtel, Reliance Jio and state sponsored BSNL/MTNL. This is exactly the pattern in mature mobile network markets world over where only four or five players are left and operating in any country.