ABN Amro suffers defeat in court
4 May 2007, AMSTERDAM – The Enterprise Chamber of the court decided on Thursday in favour of shareholders in the case they had brought against management, the Financieele Dagblad reports.
4 May 2007
AMSTERDAM – The Enterprise Chamber of the court decided on Thursday in favour of shareholders in the case they had brought against management, the Financieele Dagblad reports.
ABN Amro will now have to negotiate with Fortis, Royal Bank of Scotland and Santander. A detailed bid from the consortium is expected this weekend at the latest.
The Dutch Shareholders' Association (VEB) had lodged a complaint against ABN Amro's sale of US subsidiary LaSalle to the Bank of America. This sale is a key component of the takeover plan by Barclays which ABN Amro's executive board is eager to see happen. The commitment to sell however was blocking a competing bid on ABN Amro as a whole by Fortis, Royal Bank of Scotland (RBS) and Santander.
Huub Willems, president of the Enterprise Chamber, ordered ABN Amro to put the sale of LaSalle to a vote among the shareholders, since this item is inextricably tied up in the sale of the bank as a whole. ABN Amro would have to call another shareholders' meeting for this purpose and cannot do so in less than a month's time.
The ruling presents ABN Amro with a major problem, to say the least. On the one hand the sale agreement with Bank of America is still in effect. That contract is not terminated even if shareholders reject the sale of LaSalle.
On the other hand ABN Amro must follow the court's order and respect the shareholders, so the bank is being forced into breaching its contract, with all the possible claims and long term legal insecurity that brings with it.
ABN Amro CEO Rijkman Groenink estimated earlier that the damage from breaching the contract could run up to more than EUR 1 billion.
A possible solution would be for ABN Amro to make use of a clause in the contract with Bank of America that allows ABN Amro to withdraw from its agreement if another party comes with a "superior bid" on LaSalle by 6 am Dutch time on Monday 7 May. Bank of America would in that case receive a payment of USD 200 million.
It is expected that Fortis, RBS and Santander may come out with a detailed competing bid today or this weekend. Tough negotiations on such a bid are expected this weekend – it may result in one that can serve as a "superior bid" to the offer from Bank of America.
Now that the court has opened to door to the consortium, rumours are circulating that other parties may show an interest in ABN Amro.
[Copyright Expatica News 2007]
Subject: Dutch news