Munich Reinsurance Company
The following individual transactions are planned:
All of the transactions should be finalized next year subject to approval by the competent authorities and supervisory bodies.
Exchange of holdings between Munich Re and Allianz
Munich Re Group increases stake in the HVB Group to 25.7%
By disposing of its shares in Dresdner Bank, the Munich Re Group is cutting back on a smaller banking interest. At the same time, it is turning its stake in the HVB Group into a strategically valuable investment. With the HVB Group, Munich Re is backing the concept of the Bank of the Regions and will intensify sustained cooperation on all joint fields of business. Underlining the scope and long-term nature of the strategic partnership between both groups, the HVB Group will retain its stake of 13.3% in Munich Re AG and increase its interest in ERGO to 5%. The partners wish to tap into the potential available in retail business especially in pensions and savings and to add market shares by strengthening the existing successful cooperation. A total of over 30 million HVB Group and ERGO clients stand to profit from this step – by being offered a range of compatible products covering the full area of provision.
Cooperation between the ERGO Group and the HVB Group in Germany will be the starting point for further joint activities. In view of the ongoing process of consolidation in the European financial services sector, both partners wish to further expand their respective domestic and foreign market positions and at the same time to create further opportunities for cooperation. As to their foreign markets strategy, both groups have already identified compatible target markets in southern, central and eastern Europe. The already existing cooperation agreements between the respective subsidiaries and/or second-tier subsidiaries Hestia and PBK/BPH in Poland and the FondsServiceBank joint venture between the asset-management company MEAG (which is part of the Munich Re Group) and the HVB Group serve as examples.
Attractive offer to ERGO shareholders
The intention behind increasing the stake in ERGO to 95% is to make the full potential of the ERGO Group's value useful for Munich Re shareholders. To this end, the proceeds from the overall transaction will be reinvested in the primary insurance sector of Munich Re.
ERGO shareholders will also profit from the conversion offer in several ways. First of all, they will receive an attractive premium and also a much more liquid Munich Re share, one which is prominently represented in internationally significant share indices and whose performance over the past few years and decades has been consistently excellent and well above average. The conversion offer comes at a good time for ERGO shareholders, since they are now able to realize the good performance of the ERGO share over the last few months as well as the – in absolute terms – high share-price level. On the other hand, experience has shown that the shares of companies with a majority shareholder tend in the long term to perform below average. In addition, the development of ERGO's share price could come under pressure structurally due to the weighting in the MDAX which will in future be geared to the free float. Furthermore, ERGO shareholders can continue to take shares in "primary insurance" and "asset management" after the exchange. The ERGO Board of Management views the offer, which is subject to the rules of the German Takeover Code, as fair and attractive. The Deutsche Bank will deliver a fairness opinion.
Munich, 1st April 2001
The Board of Management
Munich Re: Formal notice regarding the ad hoc press release issued on 1st April 2001
Munich, 3rd April 2001