| Summary: | Merger and acquisition is a practical way with a relatively low risk to gain market
share, as compared to organic growth. However, this strategy needs further review
and analysis on whether it can create a higher value of firm through financial
synergy. Although the main reason behind the merger of Bank Niaga and Bank
Lippo, as mentioned by the shareholders, was to be in complince with the
prevailing regulations, it is believed that this merger would have increased postmerger
value of firm, through business and financial synergy.
The purpose of this research is to evaluate the existence of synergy on the merger
of Bank Niaga and Bank Lippo. It is done by performing pre-merger valuation on
both banks. The summation of both banks�s value of firm was then compared to
valuation result of post-merger value of firm to see the synergy.
We concluded that the merger of Bank Niaga and Bank Lippo has been able to
create synergy, ie business and financial synergy. Financial synergy can be seen
through improvement on post-merger performance, whereby value of post-merger
Bank CIMB Niaga was higher than the summation of value of pre-merger Bank
Niaga and Bank Lippo.
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