BERLIN -- In a move that could prompt takeover bids from both home and abroad, Dresdner Bank (DRSDY) pulled the plug on its planned 30 billion-euro ($28.7 billion) merger with Deutsche Bank (DTBKY) late Wednesday.
Citing a row over how to structure their combined investment banking operations, Dresdner apparently took issue with Deutsche's wishes to sell off its
Dresdner Kleinwort Benson
unit. Although the deal had been billed as a merger between equals to create one of the world's biggest banks, it was clear from the outset that the much larger Deutsche would be calling the shots.
That didn't sit well with Dresdner, which claimed in the press release that Deutsche Bank "wasn't prepared to accept constructive suggestions to organize the investment banking integration process according to objective and rational criteria." However, another large suitor is unlikely to be any more conciliatory than Deutsche Bank, and many observers figure that Dresdner should have put more effort into making the merger work.
Now that Dresdner has petulantly grabbed the ball and scampered away after deciding not to play by Deutsche's rules, there is speculation about the likely consequences of the failed merger. With the two banks breaking the taboo of a union on such a massive scale, offers from other banks, both domestic and foreign, are certain to surface in the coming days and weeks.
Indeed, only hours after the announcement, rumors were beginning to make the rounds that U.S. financial giant
was preparing a bid for Dresdner.
Nearer to home, insurance company
may push to have Dresdner merge with
, since it is a large shareholder in both banks. Analysts had thought such a partnership was in the cards long before Deutsche came into the picture last month. Moreover, Allianz could favor such a solution in the hope that it could convince a joined Dresdner-Hypovereins to fob off its retail banking operations to the insurer, just as was supposed to happen in the merger with Deutsche Bank.
"The intervention of Allianz to mediate between the two banks on whether or not Kleinwort should be retained is pathetic," wrote Tim Clarke, an analyst with U.K. brokerage
Williams de Broe
, in a research note published just before the end of the deal was announced. "It underlines the point that the leading light in all this was Allianz, not the two banks." Clarke has a sell rating on both Deutsche and Dresdner.
Allianz was the day's big loser, plunging 61.16 euros, or 13.9%, to 380. After being briefly suspended from trading in Frankfurt when news of the failed merger broke, Deutsche closed up 3.19 euros, or 4.2%, at 80.01 and Dresdner ended 2 euros higher, or 4.3%, at 49.
Deutsche Bank is certainly big enough to continue on its own for the time being, but the break with Dresdner might mean it will eventually look to expand via further foreign acquisitions, such as its takeover of
. In its unwillingness to play along with Deutsche, however, Dresdner has almost certainly increased the odds that it will become an acquisition for somebody else.