[Effect Of Branding On Mergers And Acquisitions]

by

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION2

Background Study2

Significance of the study3

Objective of the Study4

Hypothesis4

CHAPTER 2: LITERATURE REVIEW5

Defining Branding and Rebranding5

Rebranding in the context of brand hierarchy5

A branded house or a house of brands?6

Brand architecture in the context of mergers and acquisitions8

Rebranding Options9

Rebranding parameters in the context of M&A11

Relative size and strength12

Relatedness of markets and products13

Geographic distance15

CHAPTER 3: METHODOLOGY17

Resources needed18

Estimated Expenditure18

Work plan / Gantt Chart19

Safety Assessment20

REFERENCES21

CHAPTER 1: INTRODUCTION

Background Study

The banking industry worldwide has been consolidating at a dramatic rate over the past 30 years, and this trend is ongoing. Over the two decades 1984-2003, the structure of the US banking industry underwent an unprecedented transformation, marked by a substantial decline in the number of commercial banks and savings institutions and by a growing concentration of industry assets among a few dozen extremely large financial institutions (Berger et al., 1999; Jones and Critchfield, 2005). At year-end 1984, there were 15,084 banking and thrift organisations. By 2005, that number had fallen to 6,500 - a decline of 57 per cent (Jones and Critchfield, 2005; Janicki and Prescott, 2006). In 2005, the ten largest banks held almost 60 per cent of the banking industry's assets and the top three held almost a quarter of all deposits.

A similar trend has occurred in Europe, but at a slightly less dramatic rate (Walkner and Raes, 2006). Between 1997 and 2003, the number of credit institutions fell by almost 35 per cent in Germany, by more than 25 per cent in France and The Netherlands, and by 20 per cent in the UK. For the EU 15 as a whole, the number declined from 9,624 to 7,444, a reduction of more than 22 per cent. The number had fallen further by 2005, to 6,308, and that continued into 2006 (PricewaterhouseCoopers, 2007).

Developments in the global banking industry in the last two years have been dominated by the sub-prime crisis and the liquidity problems that have followed from it. These problems have made financial institutions cautious about voluntary mergers and acquisitions; this year's focus is more likely to be more on minimizing the impact of the US sub-prime crisis on existing operations, as evidenced by the large write-downs announced by most of the world's major banks. Notable exceptions have been the mergers and acquisitions brought about as a result of financial distress such as the acquisition of Bear Sterns by JPMorgan in the USA, and that of SachsenLB by Landesbank Baden-Württemberg (LBBW) in Germany. Informed commentators are suggesting, however, that further consolidation leading to increased scale is likely to be the best long-term solution to problems such as those caused by the sub-prime crisis, so the trend is probably likely to continue as soon as the immediate problems have been overcome (Boston Consulting Group, 2008).

Significance of the study

This wave of consolidation has been attributed to many factors, both macro and micro (Berger et al., 1999; Jones and Critchfield, 2005; Walkner and Raes, 2005). At the macroeconomic level, consolidation has been influenced by factors such ...