Monday, January 20, 2020
The Merger of Allianz Group and Dresdner Bank Essay -- Business Market
The Merger of Allianz Group and Dresdner Bank 1. Introduction      In our days mergers and acquisitions are a predominant feature of the international business system as companies attempt to exploit new market opportunities and to strengthen their market positions. Each year sets a new record for the total value of mergers and acquisitions and nearly every day new announcements are made in the business newspapers.      In the literature one finds a large number of explanations for the occurrence of mergers and acquisitions. Sometimes, these explana-tions are also applicable to related forms of interindustrial links such as joint ventures or strategic alliances. Therefore it is necessary to define the term merger and acquisition as it will be used throughout this paper. 1.1 Definition of the Term Merger and Acquisition      Two different phenomena are described by the term merger and acquisition. A merger is a combination of two corporations in which only one survives and the merged corporation goes out of existence. It is a unification of two or more firms into a new one and thus characteri-zed by the fact that after unification there are fewer firms than before. On the contrary can the target firm after an acquisition either remain autonomous or be partially and/or wholly integrated into the new parent company. However, from a legal point of view the firms remain independent entities.      In most of the cases, one company acquires the majority or minority equity stake in another which is not a true merger in the legal sense. The two companies are not legally united, but form an economic unit where both remain legally independent, a so-called quasi-merger. The term acquisition mainly is used when more than 50% of a company's equity are purchased, i.e. the buyer gains complete control over its target. Equity stakes of lesser percentages are referred to as minority holdings.      In spite of the legal difference between mergers and acquisi-tions, both terms are often used together. In international business the expression merger and acquisition, abbreviated M & A, or only merger, has become a general term referring to all kind of activities which are related to the selling and buying of a company. It includes classical mergers and acquisitions as well as management-buy-outs and management-buy-ins, minority equity purchases, joint-vent... ...t boost of the operation profitability, a leaner portfolio and reduction of complexity and (the Plus One) sustainable increase of the competitive strength and value. The management expected to increase the total premium income by about 4%.      Similarly Dresdner Bank started in August 2003 the so-called "New Dresdner" program with the following steps: By the end of 2003 the operational performance was stabilized and at the beginning of 2004 the cost-cutting program adopted and the implementation started. By mid 2004 the revenue growth initiatives started as well as the imple-mentation of the new business model and for end of 2004 a positive net income was expected. By mid 2005 the "New Dresdner" will be imple-mented and by the end of this year cost of capital will be earned.      Indeed, the results of last year which just now have been published show that 2004 was a year of profitable growth for Allianz. There was a significant increase in the operating profit which rose by â‚ ¬2.8 billion to â‚ ¬6.9 billion and the net income reached â‚ ¬2.2 billion. The banking segment Dresdner Bank reported an operating profit of â‚ ¬603 million in 2004 (operating loss of â‚ ¬369 million in 2003). The Merger of Allianz Group and Dresdner Bank Essay -- Business Market The Merger of Allianz Group and Dresdner Bank 1. Introduction      In our days mergers and acquisitions are a predominant feature of the international business system as companies attempt to exploit new market opportunities and to strengthen their market positions. Each year sets a new record for the total value of mergers and acquisitions and nearly every day new announcements are made in the business newspapers.      In the literature one finds a large number of explanations for the occurrence of mergers and acquisitions. Sometimes, these explana-tions are also applicable to related forms of interindustrial links such as joint ventures or strategic alliances. Therefore it is necessary to define the term merger and acquisition as it will be used throughout this paper. 1.1 Definition of the Term Merger and Acquisition      Two different phenomena are described by the term merger and acquisition. A merger is a combination of two corporations in which only one survives and the merged corporation goes out of existence. It is a unification of two or more firms into a new one and thus characteri-zed by the fact that after unification there are fewer firms than before. On the contrary can the target firm after an acquisition either remain autonomous or be partially and/or wholly integrated into the new parent company. However, from a legal point of view the firms remain independent entities.      In most of the cases, one company acquires the majority or minority equity stake in another which is not a true merger in the legal sense. The two companies are not legally united, but form an economic unit where both remain legally independent, a so-called quasi-merger. The term acquisition mainly is used when more than 50% of a company's equity are purchased, i.e. the buyer gains complete control over its target. Equity stakes of lesser percentages are referred to as minority holdings.      In spite of the legal difference between mergers and acquisi-tions, both terms are often used together. In international business the expression merger and acquisition, abbreviated M & A, or only merger, has become a general term referring to all kind of activities which are related to the selling and buying of a company. It includes classical mergers and acquisitions as well as management-buy-outs and management-buy-ins, minority equity purchases, joint-vent... ...t boost of the operation profitability, a leaner portfolio and reduction of complexity and (the Plus One) sustainable increase of the competitive strength and value. The management expected to increase the total premium income by about 4%.      Similarly Dresdner Bank started in August 2003 the so-called "New Dresdner" program with the following steps: By the end of 2003 the operational performance was stabilized and at the beginning of 2004 the cost-cutting program adopted and the implementation started. By mid 2004 the revenue growth initiatives started as well as the imple-mentation of the new business model and for end of 2004 a positive net income was expected. By mid 2005 the "New Dresdner" will be imple-mented and by the end of this year cost of capital will be earned.      Indeed, the results of last year which just now have been published show that 2004 was a year of profitable growth for Allianz. There was a significant increase in the operating profit which rose by â‚ ¬2.8 billion to â‚ ¬6.9 billion and the net income reached â‚ ¬2.2 billion. The banking segment Dresdner Bank reported an operating profit of â‚ ¬603 million in 2004 (operating loss of â‚ ¬369 million in 2003).
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