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Essay / Research Paper Abstract
This 5 page paper looks at the merger that took place between Lloyds TSB and the Royal Bank of Scotland (RBS0). The paper considers who and why the merger took place, what the views of the shareholders were likely to be, the areas of RBS that were most profitable and the way share prices have moved following the merger. The bibliography cites 5 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TERBSlloyds.rtf
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Unformatted sample text from the term paper:
market share, to increase profit and value for shareholders, to access competitive resources or as a defensive move to increase size. Whatever the motivation the philosophy behind mergers is
usually that the total of the combined entity will be greater than the sum of its parts that existed before the merger (Mintzberg et al, 2003). It is generally perceived
that the main gain of many mergers will be due to increase in the performance in the post merger (or post take-over) company. One firm that was subject to a
merger has been the Rank of Scotland which has been taken over by Lloyds TSB in the UK, which is officially a merger, but the reality is that there was
a takeover. There were a number of motivations on the part of both parties in going ahead with this merger, but it did not mean that it was without its
controversies. When looking at this merger from the point of view of the shareholders of the Royal Bank of Scotland it may be argued that they did not have
much choice, in 2008 this was the worlds largest bank when measured by assets (The Economist, 2009). However, a number of bad decision left the bank very vulnerable.
The bank was near collapse following the events of the recent credit crunch, with high outgoings and huge there were only two
potential courses of action that were able to take place, the first was that the government would effectively nationalize the bank, which would leave shareholders with nothing for their investment,
the second was that the bank could become the takeover target in a merger or acquisition. This was obviously the better choice for the shareholders as at least the bank
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