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Mergers and Acquisitions in the Banking Industry - Research Paper Example

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Citigroup is a major financial service provider group based in the New York City. The company was formed after the merger between The Citicorp and Travelers Group in April 1998. The company is the primary dealer when it comes to US treasury based securities and has been operating on the DOW since 1997.
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Mergers and Acquisitions in the Banking Industry Research Paper
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Download file to see previous pages In April 1998, the month of the merger the opening price was at $60.44, the closing price was at $61.19 with the highest price $73.50 and the lowest price $59.19. The volume traded was $10,441,700, with the adjusted closing stock price as $21.49. Two years after the merger in April 2000, the opening price was at $60.00, the closing price was at $59.00 with the volume being traded $15,572,900. The highest and the lowest prices were at $65.44 & $56.00 respectively with the adjusted closing price at $31.81.
The stock price analysis depicts that the stock price for Citicorp increased after the merger of the Citibank with Travelers Group. However two years down the line the stock price for the company reduced relative to the year of the merger depicting a stable stock position.
In 1998, the year of the merger, the average price earning ratio was at 20.70, with the share price & sales ratio at 1.49. The share price and book value ratio for the company was at 2.63, with a net profit margin of 12.3. The book value per share in 1998 was at $9.46. Two years after the merger in 2000 the average price earning ratio was at 20.20, with the share price & sales ratio at 2.61. The share price and book value ratio for the company was at 3.87, with a net profit margin of 19.3. The book value per share in 2000 was at $13.18.
Two years before the merger, the ROE for the Citibank and...
The return on equity ratio stood at 16.3% with the interest coverage in 1998 was 1.4. Two years after the merger, the debt equity ratio for the company in 2000 was at 4.14, and the return on assets ratio at 1.4%. The return on equity ratio stood at 18.5% with the interest coverage in 2000 was 1.5. Since the deal closure of the merger, the ROE of the Citicorp has fluctuated dramatically going as high as 19.86 percent 18 months after the merger to arrive at a relatively stable position of 5.76 percent in 2000.
Operating Cash Flows & Absolute Cash Flows
In 1996, the operating cash flow for the Citibank was at $3,143 millions, and in the following years the cash flow for the company fluctuated dramatically going up to $8,844 million 18 months before the merger and as low as $(94) million 15 months before the merger. In 1998, at the time of the merger, the cash flow of the company stood at $2,066 million. This decreased as to $33 million when the deal was closed. Two years after the merger the cash flow value of the company was at $1,923 million. The cash flow position of the company has reduced in terms of cash generation on an annual basis since its merger with Travelers Group.
Wells Fargo & Co
The Wells Fargo & Co is a company operating in the financial sector in the US. It is the only bank in the US which has been rated in the category of AAA. The company was built after the acquisition of the Northwestern Corporation in the year 1998. Since then the company has established itself in the market in an appreciative manner.
Stock Price
The stock price of the Citicorp in February 2003 opened at $45.57 and closed at $45.35. The highest stock price reported in the month was at $45.98 with the ...Download file to see next pagesRead More
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