ABN shares plummeted on Friday
13 August 2007, AMSTERDAM (AP) - Shares in ABN AMRO Holding NV plummeted as much as 11 percent on Friday because of worries that one or both of two competing bids for the company might fall apart.
13 August 2007
AMSTERDAM (AP) - Shares in ABN AMRO Holding NV plummeted as much as 11 percent on Friday because of worries that one or both of two competing bids for the company might fall apart.
A headline in a Dutch newspaper asserted that Fortis NV, a member of the Royal Bank of Scotland-led consortium seeking to buy ABN AMRO, was "under pressure" in financing its EUR 70.5 billion offer.
A Fortis spokeswoman said the report in Het Financieele Dagblad was technically correct in citing an executive as saying a bond sale Fortis had planned could be delayed. But she said the remark was intended to demonstrate how flexible the bank is in choosing how and when it will finance its part of the deal, rather than suggest any serious financing difficulty.
Het Financieele Dagblad reporter Cor de Horde said his story contained no factual errors and the paper stood by it.
ABN AMRO shares were down 4 percent at EUR 33.66, as investors appeared to re-evaluate the risk that the RBS-led consortium's EUR 38.07 per share offer might lose to a EUR 33.18 per share bid from Barclays PLC, or that both could fail.
Either takeover, if successful, would be the largest in the history of the financial industry. ABN AMRO shareholders are to debate the bids on 20 September.
The fall comes amid a wider slump in global equities amid worries a credit crunch will hurt growth and earnings, leading the European Central Bank and other global central banks to inject billions of euros in cash into money markets in order to calm liquidity worries.
Friday was the first day since April that ABN AMRO shares have traded below, rather than between, the two competing prices offered. Analyst Dirk Peeters of KBC Securities said the share movement didn't necessarily mean investors think Barclays is going to win.
"They're scared," he said. "They view Barclays' share price as providing a bottom for ABN AMRO, since (Barclays) is cheaply valued anyway."
Het Financieele Dagblad cited Fortis's Chief Financial Officer Gilbert Mittler as saying on the sidelines of the company's half-year earnings review Thursday that a planned EUR 2 billion sale of bonds could be delayed due to weak demand on credit markets.
Fortis plans to pay EUR 24 billion for its share of ABN AMRO - notably the Dutch operations and its asset management business - with some mix of a share issue of up to EUR 13 billion, up to EUR 8 billion in asset sales, including the bonds in question, and up to EUR 7 billion in debt instruments.
Fortis has already made EUR 1.6 billion in asset disposals and carried out a EUR 2 billion convertible bond issue in preparation of a win.
Spokeswoman Liliane Tackaert said Mittler's point was not that the bank couldn't place the bonds, but that because of a EUR 10 billion "bridge" credit line in place, it had the flexibility to choose when and how it fills in the financing.
"I think we'd all agree that for instance (Thursday) would not have been the opportune moment" to sell the bonds she said. "We can afford to wait two weeks or two months, or any amount of time. That's the point of the bridge financing."
Peeters agreed, saying Fortis was well-capitalised and he couldn't foresee any problem with the bank financing its end of the deal.
The 10 percent fall in ABN AMRO's share price was irrational, he said, and might have been caused by a computer program instructed to dump shares if ABN AMRO fell below a certain level.
[Copyright AP 2007]
Subject: Dutch news