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Is There Any Difference of Financial Features between Bidder and Target Banks in Nigeria Mergers and Acquisitions?

DOI: 10.4236/oalib.1104729, PP. 1-16

Keywords: Merger, Acquisition, Financial Features, Bidder Bank, Target Banks, Nigeria

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Abstract:

The Nigerian Banking sector has suffered problematic times since 1999, when the sector was facing problems of corporate governance as identified by the Central Bank of Nigeria. However, CBN started embarking on a comprehensive reform agenda since that time and many measures have been taken to bring the sector on the right track by imposing an IMF Code of Good Practices on Transparency in Monetary and Financial policies. Mergers and Acquisitions (M & A) is a process “where two or more companies are combined to achieve certain strategic and business objectives”. Therefore, Merger and Acquisition seems as a means of achieving business and strategy objectives. The study examined the differences of financial features among bidder and target banks in the Nigerian commercial banking sector. The findings of paired t-test on financial features among bidder and target banks show that bidders and targets’ mean of each variable and financial features between bidder and target banks for 3 years (2002-2004) average indicates that bidders and targets’ mean of each variable are statistically different at 5%. Similarly, the findings for bidder banks’ performance of 5 years (2000-2004) before and 5 years (2006-2010) after mergers and bidder banks’ performance of 3 years (2002-2004) before and 3 years after mergers (2006-2008) are also statistically different at 5%. The study recommends that managers of large and efficient banks seeking to go for merger and acquisition should halt from targeting small and less efficient banks because it will lead to operational inefficiency.

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