Mergers and Acquisition as a Strategic Approach in the Banking Industry in Kenya

Abstract

Due to competitions and changing business environment in the domestic and global markets, strategies have remained the only strategic tool that companies adopt to realize success in the market. To survive and perform in the competitive business environment, banks in Kenya employed different types of strategy to consolidate their industry position and increase their market niche. The research objective was to study the definite population in the banking industry in Kenya that adopted the strategy of Mergers and Acquisition. The study explored the conceptualization and actualization of the strategy with a bias to the determining parties, factors and the challenges associated with the strategy. Primary data was collected using semi-structured questionnaires with both close-ended and open-ended questions. The respondents in this study are the respective banks senior management officials who took part in the process of Mergers & Acquisition strategy in their respective banks. Collection of secondary data was achieved through published materials. The data collected from the primary sources was analyzed by content analysis. The data collected was presented in the form of charts and content. The study found out that the Mergers and Acquisitions strategy was favoured by the banks over the internal own venture as a strategy to spur growth and diversity. This was achieved by using the strategy to consolidate their capital base, adopt new technology, diversifying into new lines of business like insurance & mortgages. This was mainly championed by the shareholders with the sole aim of maximizing their return on investment.