The Merger of Allianz Group and Dresdner Bank Essay

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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
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From a strategic point of view they can be considered as an alternative to mergers.

1.2 The Different Types of Mergers The merger boom in the early nineties was different from pre-vious waves, not only in terms of its geographical spread and increased scale, but also in terms of the type of organizational combinations it has produced. Usually mergers and acquisitions are considered in terms of the extent to which the business activities of the acquired company are related to the acquirer. There are four main types of mergers: Horizon-tal, conglomerate, vertical and concentric mergers.

A horizontal merger combines two similar companies in the same industry. A conglomerate merger refers to the situation where the acquired organization works in a completely unrelated field of business activity. A vertical merger unites two companies from successive pro-cesses within the same industry. Very often it is subdivided into vertical backwards or vertical forwards mergers , e.g. a manufacturer acquires retail outlets. In a concentric merger the acquired company works in an unfamiliar but related field into which the acquiring company wishes to expand.

1.3. An Overview of the Various Motives for A Merger The oldest explanation for a merger goes back to the concept of monopoly power which is reflected in a companies market share and the barriers to

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