Merger and Acquisition as Survival and Sustainable Business Growth Strategy in the Nigerian Banking Industry

Abstract

This study uses the ex-post facto research design to examine the relationship
between merger and acquisition (measured by CAMEL) as a survival and business growth strategy (measured by Earning per share) of Nigerian Deposit Money Banks (NDMB). The aim of the study is to investigate whether merger and acquisition produces the desired synergistic effect in the sampled banks. The population of the study comprises twenty-four deposit money banks classified into two groups of ten trouble and fourteen sound banks. Out of which six banks that had gone through the second round of consolidation were selected using purposive sampling technique. The study makes use of secondary data collected from annual reports and accounts of the sampled banks for a period of seven years (2008 – 2014. The study employs multiple regression analysis and analysis of variance (ANOVA) to analyze the data collected. The regression results of the study show a mixed relationship between merger and acquisition and business growth of the sampled banks. The study argues that merger and acquisition as survival and sustainable business growth strategy has failed to produce the desired synergistic effects among the sample banks. This negates the theoretical
and financial beliefs that merger and acquisition would automatically lead to
synergistic gains and value creation for shareholders. The study thus recommends that CAMEL indicators should be managed better to have a positive relationship with business growth.