Effects of Mergers and Acquisitions on Profitability and Earnings Per Share of Selected Deposit Money Banks in Nigeria

Abstract

Firms adopt mergers and acquisitions as a strategy for growth and to enhance profitability. This study examines the effects of mergers and acquisitions on profitability and Earnings per Share of selected deposit money banks in Nigeria. The study utilized secondary data obtained from the Annual financial reports of the banks under study. Analysis of pre- and post -merger data were carried out. Two hypotheses were developed and tested. Independent Sample t- test and Simple regression analysis were used to the hypotheses. Results revealed that there was a significant difference in profits between the periods as profits improvement tremendously immediately after the mergers. It was also revealed that there was significant effect of global financial crisis on EPS. The study recommends that Bail-out funds should be provided the banks in need as done to union bank and others. It also recommends that proper legal framework should be instituted to mitigate the effect of post global financial crisis.

Key words: Merger, Acquisition, Profitability, Earnings per Share, Global Financial Crisis