In July 1994 the top managers of Sovereign Bancorp were at loggerheads:⁴⁸ 

• Jay Sidhu, president and chief executive officer of the $5 billion bank, wants to be an acquirer. Only by buying up other banks, he argues, will Sovereign gain the financial clout it needs to survive in the increasingly competitive industry. 

• But Fred Jaindl, the bank’s chairman and largest stockholder, wants it to be acquired. A buy-out, he figures, would deliver big profits to stockholders, including $50 million on his own stock.

a. Are shareholders generally better off as sellers, rather than buyers, in mergers and acquisitions? Why?

b. Under what conditions would the active acquisition strategy advocated by Sidhu make sense for Sovereign and its shareholders?