Abstract

Value Generation through M&A Transactions in the European Banking Industry? - The BNP and Paribas Example - (Part II)

Do M&A transactions in the European banking industry generate shareholder value? Against the background of the described contradiction apparently existing - on the one hand - between strong M&A activities, on the increase again in the banking industry of late, and the lack of value generation through M&A transactions as documented on the basis of research (especially for the respective buying banks) on the other, the academic literature has increasingly drawn attention to the need for proceeding in a more differentiated individualised manner by using case studies extending beyond previous research approaches and taking account of the special characteristics of anyone transaction. This article, using the case study approach, therefore focuses on the analysis of value generation and, respectively, value destruction as a result of the amalgamation of BNP and Paribas which represents one of the most important national consolidation steps in the European banking industry in recent years. The analysis is based on a detailed evaluation of the competitive bidding process, on the manner in which the M&A strategy has been deduced as well as on a description of the integration process (part I of this article). Focusing this article on the background conditions of the transaction and the implementation of the process of integration as well as on the value generation achieved through the transaction permits an overview of the complexity of such a transaction as well as conclusions for important implications and success factors concerning the expected consolidation of the banking industry in future (especially through hostile transactions). In addition to these contentual aspects (part I), the usefulness of the case study approach for analysing the issue has been proven. The multitude of details obtained from analysing the transaction process for several years shows (on the basis of a critical comparison with the classic approaches) that the use of case studies is appropriate as a complementary method for evaluating M&A transactions in banking in addition to the previously applied cross-sectional approach of event and performance studies.