The impact of mergers and acquisitions on shareholders’ wealth: evidence from Nigeria

Abstract

This research paper seeks to validate the controversial post-merger synergy in Nigerian context. According to theory, mergers and acquisition should enhance synergistic effect to the advantage of the shareholders. This paper evaluates whether post-acquisition value attributable to shareholders of Nigerian banks surpasses that of the pre-acquisition period. The paper uses a fifteen year secondary data of five judgementally selected banks to analyse and compare pre-acquisition and post-acquisition shareholders‟ value in a balanced manner. The measurement index of shareholders' wealth is a modified version of the ROE (Return on Equity). SPSS version 20 and Excel spread sheet was also used to get the R, R2 ,T-test and F-test. It was discovered that shareholders' fund strongly influenced the profitability of the Nigerian banks but value to shareholders in the post-acquisition period is lower compared to the pre-acquisition period. Managers of Nigerian banks should not rest on the oars of government initiatives. They should be proactive in their operation as far as profitability is concerned. This research is the first of its kind to make a balanced and up to date comparison of pre-and post M&A period (ie 7yrs pre-merger & 7yrs post-merger). The index of measurement is modified ROE that incorporates only what relate directly to shareholders alone.