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Introduction
It was announced as one of the most important acquisitions of the year. It was certainly one of the largest. In April 2001, the Munich-based insurance firm, Allianz, bought Dresdner Bank for more than [euro]20 bn.
"Allianz-Dresdner will combine 17 million clients in Germany through its network of 12,000 agencies, with Dresdner's 6.5 million clients through its 1,200 branches" , stated the Insurance Journal magazine. "This gives the group access to half the households in Germany, and positions it to compete on a global basis with giants like Citicorp, UBS and Credit Suisse" (Boyle, 2001, April 9).
Unfortunately, such optimism was unfounded. The projected synergies never materialized and in August 2008, Allianz sold Dresdner Bank to Commerzbank for [euro]9.8 bn. (Jolly, 2008). The company had lost more than half its value in just seven years.
The origins of the acquisition
In principle, the deal had many of the necessary conditions to be highly successful. Fusing an insurance business with a strong bank was not a unique approach. In other neighboring European countries, comparable strategies had been successfully developed. The Belgian company, Fortis, had made a profit of [euro]950 m in their joint venture with the Spanish bank - La Caixa (La Caixa Press Room, 2007). In the UK, the merger of Halifax building society and the Bank of Scotland had resulted in the creation of the second largest bank in the UK, measured by earnings (Venzin, 2009). This newly formed corporation could even claim cost-efficiency leadership in the industry.
To such good omens from their competitor's success should also be added the wealth of experience of the German insurer. Allianz had become Europe's largest insurer through a series of mergers and acquisitions during the 1970s and 1980s (Bower et al. 2007, p. 2). In 2001, Allianz, as one of Germany's largest companies, asserted that they were the most influential company in the country because of their many shareholdings.
Their CEO, Dr Henning Schulte-Noelle, had already overseen 14 large and more than 50 small acquisitions (Bower et al. , 2007, p. 1). There was no shortage of experience within the company. Drawing on this, Schulte-Noelle saw three main drivers to acquiring a bank. First, there was the increasing dependence on private pension savings for...