Mergers, Acquisitions and Takeovers Case Study

UniCredit's Takeover of HVB Group, Europe's Biggest Cross-Border Takeover : The Synergies

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Abstract:
Italy's largest bank, UniCredito Italiano SpA, popularly known as UniCredit, announced the takeover of HVB (Bayerische Hypo-und Vereinsbank AG), the second biggest bank in Germany, in June 2005. The takeover is valued at 15.4 billion euros (approximately US$18.7 billion), making it the largest cross-border bank deal in European banking industry. The merged entity will be the fourth largest bank in the European Union and eighth largest in the European continent. With this takeover, UniCredit aims to expand its operations in central and eastern Europe, while HVB Group is looking at ways to regain profits and consolidate its business operations in Germany and in other parts of Europe. However, many experts and banking industry analysts are sceptical about the survival of this takeover as consolidations and cross-border deals in the banking industry in Europe were unsuccessful. Added to this, HVB Group has accumulated losses worth 1,992 million euros as of March 1 st 2004, leaving UniCredit with the challenge to turnaround HVB Group.

Pedagogical Objectives:

• To discuss whether the takeover will survive in the light of various unsuccessful consolidations and cross–border deals in the European banking industry.

Keywords :  UniCredit Group; HVB Group; Takeover, acquisition; Synergies; Competition; German banking industry; Italian banking industry; Consolidation

Contents : 
Italian Banking Industry & UniCredit
The HVB Group
UniCredit’s Acquisition of HVB Group
The Takeover & Synergies
Will the Consolidation Survive?
Asset Quality of Italian Banks
Allowances made by Italian Banks Against Loan Loss Provisions to Cover Bad Debts
Return on Equity for Banks in Major Economies
Business Divisions of HVB Group