Value Creation Through a Bank Merger: A case study of DnB and Gjensidige NOR

Gard Hesland Noren & Semi Pettersen Dahmane

Student thesis: Master thesis


In 2003, DnB NOR was established as a result of the merger between Den norske Bank (DnB) and Gjensidige NOR (GNO). The general objective of a strategic move like a merger or an acquisition (M&A) is to expand a company’s business, increase market share or to improve earnings. The purpose of this thesis is to examine the merger of DnB and GNO and track the performance of the merged entity after the consolidation. The strategic analysis shows that increasing regulations, declining share prices all over the world and the integration of the financial markets raised the competitiveness in the banking industry. To be able to compete with larger, international financial conglomerates that were penetrating the market, it was essential to obtain a significant size. This analysis estimates a total value of the combined firms equal to BNOK 43,5, which is slightly below the market values at the time. The valuation estimates indicate that the merger was priced marginally higher than the standalone value of each company combined. However, by incorporating the expected merger synergies, the deal appears to become profitable. Further, we find that the merger generated synergies that were realized earlier than projected and that the merger enabled DnB NOR to efficiently compete with the other Nordic financial giants. In shortterm perspective, DnB NOR increased its income and profitability more than its defined competitor group. On a long-term, DNB’s market value outperforms its competitors over the same period, building grounds towards becoming one of the biggest firms in Norway.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final ThesisMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2017
Number of pages134