Merger and Acquisition Assignment Help Introduction Merger & acquisition (M&A) is the most popular way of corporate restructuring or the business combinations. Merger can be defined as the combination of two or more companies in one company. The M&A has played an important role for the external growth of a number of companies in all over the world. In this paper, two public corporations PNC Financial Services Group Inc. that has acquired another company and Ouachita Independent Bank (OIB) that does not have a history of mergers and acquisitions and operates solely within the U.S. are selected from banking industry. This merger and acquisition case study assignment help paper analyzes the merger strategy of PNC and also suggests the profitable target as merger or acquisition for OIB. It also evaluates international business and corporate level strategy of PNC and proposes business and corporate level strategy for OIB.
Evaluation of the Strategy of PNC Financial Services Group Inc PNC Financial Services Group Inc. has acquired Royal Bank of Canada (RBC) with agreement of paying $3.62 billion in cash and stock for Royal Bank of Canada’s U.S. retail banking unit and credit-card assets. The purchase price is currently estimated at approximately 97 percent of RBC Bank (USA) tangible book value, based on its balance sheet as of April 30, 2011. This acquisition can be said a wise choice in terms of outstanding growth opportunity for PNC because it provided PNC a great opportunity to enter in growing southeast markets like Birmingham, Charlotte, North Florida, Durham, etc. with 400 branches. It created greater value for its stakeholders in those areas, where it was not in existence (Smith, Walter and DeLong, 2012). After this acquisition, company enabled to launch its innovative products and services to new markets that established its business and client relationship effectively. Through this acquisition, PNC dispersed its market in northern Virginia and central Florida, adding about 900,000 customers and 483 ATM locations. In addition, the existing network of the company also became wider after combining with RBC as now; it has 2,870 branches that make it 5th largest bank behind Wells Fargo, Bank of America, Chase and U.S. Bank. This transaction resulted in acquire good market in local deposits because RBC ranked seventh in local deposits that provided PNC a large customer base in this segment (Warren, 2011). After acquisition with RBC, it became possible for PNC to have a system of internal control to combat money laundering.
Through this, PNC also utilized its financial and managerial resources effectively to capitalize and mange its business. This merger has a positive impact on the convenience and needs of the communities to be served because it helped the bank to expand its branching network. The limited expansion of PNC as a result of merger does not affect its business operations because size, operations, activities and complexity of the combined organization was not different from its current operations. This merger was also consistent with the requirements of the Bank Merger Act according to the OCC (Smith, Walter and DeLong, 2012). After integration of RBC Bank, the company reported net income of $811 million and exceeded analysts’ estimates for per-share earnings. It was because this acquisition gave PNC tremendous opportunities to grow in different emerging markets. With the help of this acquisition, PNC added 415 branches in six southeastern states, $18 billion in deposits and $15 billion in loans. However, there were differences in RBC Bank product offerings and PNC products but by proper planning, PNC got command over different offering in areas such as corporate banking and wealth management. PNC has been successful with acquisitions in the past. Therefore, on the basis of positive outcomes, the future prospects of this acquisition can be stated favorable (Warren, 2011).
Merger strategy for Ouachita Independent Banks Ouachita Independent Bank (OIB) has not been involved in any merger or acquisition. It is established in north Louisiana in 1997 for serving local banking. Its business strategy states that financial decisions that affect people’s lives should be made in the area, where they live in, not a far-away corporate headquarters. Therefore, it believes in local business to offer its services to local people and is committed to exceptional customer service (Ouachita Independent Bank, 2012). As per business assignment help experts, In this global era, a company cannot survive for a long period without expansion of its business worldwide. It can be beneficial for OIB to expand its business in different location of the world. It can implement merger or acquisition strategy in its business expansion. American Saving Bank (ASB) would be proved a profitable candidate for the OIB to acquire or merge with. American Saving Bank is the corporation introduced in 1889 that focuses towards serving the Middletown people with finest financial services. ASB focuses towards saving the future of people and providing efficient services. It provides facilities everywhere and anytime to the people and provide services through banking and ATM facilities (American Saving Bank, 2012). It can be profitable for OIB to be merged with ASB because merger decision will not only maximize the profits and shareholders’ value but also increase social value, economic value, industrial benefits etc. At the same time, it would enjoy a significant growth in its financial and operating performance. ASB provides several international services that can create an effective market for OIB to make global brand image internationally. OIB would be enabled to get significant positive gains for its shareholders in terms of increase in stock prices and increase in shareholders’ return. The return on assets and cash flows could be increased for the companies that describe the increase in operating performance of the business due to strategic and operational gains. The similarity in accounting policies, languages, culture, structure etc. can cause a rise in the overall performance of the company (Coffey, Garrow and Holbeche, 2012).
International Business Level and Corporate Level Strategy for PNC At global level, PNC operates its business by providing a broad range of distinct products and services to the international customers. Its top management allows the global executives to implement their own ideas at their own bank without any interference. As a result of the autonomy in their work, PNC and its affiliated banks are able to get an additional advantage in international market by increasing productivity of the company. With the effective planning in its business strategy, PNC quickly makes up for the dilution in expansion of business globally. It is committed to its diversified services that builds its sound image in stock market by increasing interest of shareholders at large extant (Peng, 2009). PNC operates its business in regional retail banking operations along with diversified financial services that helped the company to get profit in banking downturns. It expanded its presence in the areas of asset management services and investment banking. In international corporate level, company is known for its friendly takeovers. It implements a corporate strategy that focuses on low cost leadership in offerings to attract more customers at global level (Wesson, 2007). It can be recommended for PNC that company could be involved in new affiliates that will provide an advantage of the extended services offered by the group. The company can plan for investment in high-growth business ventures because it has maintained a strong position on its customer banking services. There is more competition and bad economic times in market. So, Company can restructure its venture capital business at large level and focus on the auto leasing market. It and its affiliated banks should avoid any violation of act because it can affect its financial results. It should use proper accounting standards that will be helpful for the company to make the investors understand about the financial condition of the firm effectively. PNC should execute activities including restructuring of its banking operations that can result in future earnings and profit growth.
Business Level and Corporate Level Strategy for OIB Ouachita Independent Bank focuses on improvement in its services continuously in order to provide efficient services to the customers. Its strategy to serve the local people helps it to make good image in domestic market. In order to make improvement in overall strategies, this bank should take effective strategic decisions that can help in improving the corporate level strategy of the corporation (Ouachita Independent Bank, 2012). Well educated and skilled staff can be selected through effective recruitment policy, which can help Ouachita Independent Bank to provide efficient services to people and concern for their growth and well being. OIB should also provide various business facilities to the entrepreneurs that will fulfill the unique banking needs of the entrepreneurs. In addition, Ouachita Independent Bank should help in assisting the people in planning, estimating and exploring their financial options. This bank should focus towards adopting the diversification strategy in order to expand their business. With the help of diversification, corporation can be able to provide more services to customers. This strategy is helpful in achieving the competitive advantage for the bank. Through diversification, OIB should expand its business in northern Mississippi, which is outside the state (Annual Report, 2012).
Expanding its services in this state would provide various opportunities that corporation can explore in effective manner. It is analyzed that corporation should provide training and development facilities to employees, so that they could be able to use the financial resources in better way in order to make diversification more effective. Apart from this, corporate level strategy helps in preparing the strategic plans for the bank. Therefore, organization should adopt the diversification strategy in order to expand its business. In case of business level strategy, OIB should focus towards adopting the low cost strategy. With the help of low cost strategy, corporation can be able to attract the customers to take financial services from the bank. Providing loans on the low interest rates will be helpful for the corporation to sustain in the competitive market environment. Low cost services with efficient facilities help in providing the satisfaction to customers. Both business level and corporate level strategy should be adopted by the corporation effectively, so that OIB can be able to attain competitive advantage and make strategic plans for the people they serve (Hill & Jones, 2012). Therefore, it is analyzed that OIB should expand its business in order to provide efficient services to people and fulfill their financial needs and save their future.
Conclusion On the basis of above description by assignment help experts, it can be said that the financial performance of a company can be increased with the help of implementing M&A strategy in global market.
After acquisition, shareholders of both the companies PNC and RBC experienced an increased in their return. To be merged with ASB can be good decision for OIB for expanding its business in international market. PNC’s international business level strategy and corporate level strategy are effective that enabled the company to gain competitive advantage in the international market. It can grow its market by involving high growth business ventures and new affiliates. With the help of diversification strategy, OIB can expand its business and fulfill different needs of local customers effectively. References American Saving Bank (2012). Retrieved from https://www.asbhawaii.com/ Annual Report (2012). Retrieved from http://www.oibank.com/custom/oibank/pdf/annual_report_2012.pdf Coffey, J., Garrow, V. and Holbeche, L. (2012). Reaping the Benefits of Mergers and Acquisitions. USA: CRC Press. Hill, C.W.L. & Jones, G.R. (2012). Strategic Management Theory: An Integrated Approach. USA: Cengage Learning. Ouachita Independent Bank (2012). Retrieved from http://www.oibank.com/business/checking Peng, M. W. (2009). Global Business 2009. USA: Cengage Learning. PNC (2012). Retrieved from https://www.pnc.com/webapp/unsec/Homepage.do?siteArea=/PNCCorp/PNC/Home/Personal Smith, R. C., Walter, I. and DeLong, G. (2012). Global Banking. UK: Oxford University Press. Warren, E. (2011). Exiting TARP and Unwinding Its Impact on the Financial Markets. USA: DIANE Publishing. Wesson, T. J. (2007). Canada and the New World Economic Order: Strategic Briefings for Canadian Enterprise. USA: Captus Press.
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