Merger of ING Vysya with Kotak Mahindra Bank
| Case Code: BSTR471 Case Length: 16 Pages Period: 1985 - 2014 Pub Date: 2015 Teaching Note: Available |
Price: Rs.400 Organization : Kotak Mahindra Bank Limited,ING Vysya Bank Limited Industry : Banking Countries : India Themes: Mergers & Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In November 2014, Kotak Mahindra Bank Limited (Kotak) announced its acquisition of ING Vysya Bank Limited (ING Vysya), a quasi-foreign bank owned by Dutch multinational, the ING Group , in a full-share deal worth of US$2.4 billion. The deal, the biggest in the Indian banking sector, created the fourth largest private bank in India with a balance sheet size of Rs. 2 trillion and market capitalization of over Rs. 1 trillion. According to industry experts, this deal helped Kotak to expand its presence in India and to compete with other topnotch private sector players in the Indian banking industry.
According to experts, the Indian banking sector needed such mergers not only to create world-sized banks to compete with foreign banks but also to create banks with a sufficient capital base to fund various large infrastructure projects crucial to maintain the growth of India economy.
However, industry experts had doubts on the synergies of the merger. They quoted a study by KPMG and Wharton which found 83% of Merger and Acquisitions (M&A) failed to produce any benefits and over half of M&A ended up reducing shareholder value instead of increasing it. Some experts were worried about the various challenges the merger deal threw up, such as the cultural differences between the two banks and the reaction of the employees union among others. However, other experts were positive about the deal..
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