We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • No, a CEO Can’t Simply Rewrite the Rules of M&A

    June 20, 2018 by Chris Hughes

    The CEO of Europe’s biggest insurer is up for a big deal. He just doesn’t want Allianz SE to pay for it. Oliver Baete is going to find it hard to have his cake and eat it.

    Three years into the job, and things are going well for him: Allianz reckons it has surplus capital and the shares have outperformed their peers despite a recent wobble. But Europe’s insurance market is only growing slowly, and the group is keen to boost its general insurance business, which is less capital intensive than life and savings. A deal would put some of Allianz’s surplus cash to work, generate savings and re-shape the group.

    Click HERE to read the original story via ThinkAdvisor.

    Baete has long-list of potential targets, including Zurich Insurance Group AG, Aviva PLC and RSA Insurance Group PLC, Bloomberg News reported last week.

    A small deal wouldn’t make much difference to Allianz, which has a market value of 76 billion euros ($87 billion). But big deals mean large premiums. The standard top-up of 30% on a 5 billion-euro takeover would cost 1.5 billion euros. For a company the size of, say, Zurich, the equivalent would be 13 billion euros. Axa SA agreed to pay a 57% premium for XL Group Ltd. in March — and its shareholders are livid.

    Faced with this dilemma, Baete recently floated the idea of a merger of equals in an interview with the Financial Times. But this would need a target willing to play the junior partner and agree to a combination at prevailing market values with no premium.

    There would be synergies for sure — cost savings from slashing duplicate functions plus a capital benefit from diversification. Scale is also advantageous at a time when the industry is spending on technology like car sensors and apps that cut out brokers. Better, so the argument goes, for two firms to share the burden of investment than replicate it on identical projects.

    Set against this is the higher than average disruption in financial services deals. Trustbusters could force disposals, shrinking the deal and its benefits. Arguing for a “European champion” to see off the Chinese bogeyman isn’t going to cut it, not yet at least. Axa and Allianz aren’t facing the same competitive pressures as, say, Alstom SA and Siemens AG.

    For these reasons, targets will want a decent premium and buyers like Allianz will be wary of paying it. Zurich’s management has argued that the digitization of insurance means absolute size is no longer a benefit, although scale helps locally. A deal would dilute its very Swiss identity, making it a tough sell politically.

    Aviva’s 20 billion-pound ($27 billion) market value means a takeover premium would be affordable. What’s more, the company is cheap, trading at only nine times next year’s estimated earnings. But its business mix wouldn’t do much to tilt Allianz away from life and pensions — unless Allianz could find a specialist life company willing to take that part off its hands.

    RSA, worth 6.8 billion pounds, has no life business but its shares are already baking in a takeover premium. Allianz would still have to pay something more on top.

    Baete can’t rewrite the rules of M&A. If he wants a deal and the target doesn’t, he’s going to have dangle a proper takeover premium. That applies to transactions big and small. Otherwise he could do worse than grow Allianz by improving its valuation, and letting shareholders find a use for his surplus capital.

    Originally Posted at ThinkAdvisor on June 19, 2018 by Chris Hughes.

    Categories: Industry Articles
    currency