Merger of ING Vysya with Kotak Mahindra Bank

Nestlé under Fire over Unhealthy Product Portfolio: Will the Company Emerge Unscathed?
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
Nestlé under Fire over Unhealthy Product Portfolio: Will the Company Emerge Unscathed?
Abstract Case Intro 1 Case Intro 2 Excerpts


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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