The Merger of Allianz Group and Dresdner Bank

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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 seminar paper. 1.1…show more content…
Conglomerate and vertical mergers help to strengthen the market power by discouraging potential entrants. The monopoly theory played a dominant role in the past, especially in the first great merger wave in the U.S. between 1887 and 1904. Today most of the horizontal mergers are too small to confer monopoly power, because larger acqui-sitions fall under intense antitrust scrutiny. In the industrial strategy and organization literature mergers are often explained in terms of synergies and/or efficiencies. The efficiency theory is based on the assumption that the combined firms are more profitable than the companies operating separately because of the operational, managerial and financial synergies. Operational synergies include economies of scale, economies of scope and economies of experience. The valuation or information theory explains a merger from a financial instead of a strategic perspective and assumes that the current market price of a company does not reflect the true value. The company which buys an undervalued firm believes it can manage the target company better than the current management. Corporate buying and selling activities are traced back to the conditions of financial markets. Presently globalization is the key feature of the new competitive landscape within which mergers are taking place. However, it is impor-tant to keep in mind that globalization is a trend and not an already exis-ting condition. Globalization is not spreading

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