Dutch lawyer: ABN Amro sale of US arm was legal
27 June 2007, AMSTERDAM - ABN Amro didn't need shareholder approval to sell its U.S. arm, a top Dutch government lawyer said in an advisory opinion that somewhat increases the chances that the bank will ultimately be bought by Barclays.
27 June 2007
AMSTERDAM - ABN Amro didn't need shareholder approval to sell its U.S. arm, a top Dutch government lawyer said in an advisory opinion that somewhat increases the chances that the bank will ultimately be bought by Barclays.
The sale of ABN's Chicago-based LaSalle Bank to Bank of America was blocked by Amsterdam's Superior Court last month, bringing the largest takeover fight in the financial industry's history to a standstill.
ABN Amro Holding NV is at the center of a tug-of-war between two rival buyout offers from Barclays PLC and a consortium of banks led by Royal Bank of Scotland PLC.
Barclays' all share bid of roughly EUR 61.9 billion (US$83.0 billion) is worth at least 10 percent less than the mostly cash RBS offer, but it's dependent on the LaSalle sale going through. RBS wants LaSalle and its offer is dependent on the sale being blocked.
In a written submission to the Supreme Court, which is to rule on an appeal, Advocaat Generaal Levinus Timmerman said the sale was legal under Dutch law, and the Superior Court decision should be overturned.
The Superior Court had said that shareholders should have been consulted on the LaSalle sale, but Timmerman said the right of shareholders to approve a deal "must be founded on a widely accepted legal conviction, which is not the case in the present matter."
The Supreme Court almost always follows advice of the advocaat generaal, but is not bound to do so. Each party involved in the case will have a chance to respond to Timmerman's findings before the Supreme Court rules.
ABN Amro said it was studying the advocaat generaal's opinion and noted that it was an "opinion ... and not a judgment." It said it now expects a ruling in mid-July.
Dutch shareholders' union VEB said it would continue to lobby for the LaSalle sale to be unwound.
BofA spokesman Christopher Feeney said the bank was pleased with Timmerman's recommendation. "We look forward to the Supreme Court decision," he said.
ABN Amro shares initially fell sharply on the news, which brightens prospects for Barclays' lower offer, but later regained ground and were down 0.8 percent to €34.18 (US$45.85). Barclays shares fell 1 percent to 710 pence (€10.56, US$14.16) in London.
At those levels, Barclays' offer is worth €34.05 (US$45.68) per share. RBS's offer is worth around EUR 37.40 (US$50.17) _ suggesting investors now believe Barclays is more likely to win the bidding war.
But analyst Thijs Berkelder of Petercam said the fight for the rest of ABN is still undecided and the only clear takeaway from Tuesday's news is that Bank of America Corp. is now very likely to win LaSalle.
"Why wouldn't the consortium come up with a new bid?" he said, arguing that RBS still wants to buy ABN Amro's investment banking business, while partners Fortis NV of Belgium wants ABN's Dutch operations; and Banco Santander Central Hispano SA of Spain wants its Italian and Brazilian arms.
"However, there was value in LaSalle, so it's not likely that the consortium will come up with a higher bid."
ABN's management had agreed to sell LaSalle to BofA for US$21 billion (EUR 15.5 billion) in what was widely seen as a poison pill measure to avoid a deal with RBS.
Shareholders protested, saying that such a large sale should have been put to a general meeting.
The Superior Court agreed, in part because the sale was tied to a buyout of ABN as a whole _ which definitely requires shareholder approval.
But Timmerman focused instead on Dutch corporate law, which said shareholders need only be consulted on sales of assets that constitute more than a third of all operations.
That leaves open the possibility that shareholders could reject the Barclays merger even if the decision on LaSalle is taken out of their hands.
Notably, Timmerman explicitly stopped short of saying whether he thought ABN Amro's board of directors had acted "unlawfully with respect to its shareholders by selling LaSalle" against their apparent interest.
That leaves open the possibility that ABN Amro's management could be vulnerable to shareholder lawsuits for mismanagement in preferring Barclays' lower offer.
"ABN would have received a much higher price for LaSalle" if they had announced plans to sell it ahead of time," Berkelder said, calling the snap decision to sell and the terms of sale "ridiculous."
[Copyright AP with Expatica]
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