ABN withdraws support for Barclays bid
30 July 2007, AMSTERDAM (AP) - The boards of ABN Amro Holding NV Monday said they were dropping their support for a takeover bid by Barclays PLC in the face of a higher bid by a consortium of banks led by Royal Bank of Scotland PLC.
30 July 2007
AMSTERDAM (AP) - The boards of ABN Amro Holding NV Monday said they were dropping their support for a takeover bid by Barclays PLC in the face of a higher bid by a consortium of banks led by Royal Bank of Scotland PLC.
But they said in a statement they could not endorse the RBS deal either because of "significant unresolved questions" and could not currently recommend either to shareholders.
The RBS bid, mostly in cash, was worth EUR 70.5 billion at Friday's closing share prices, while the Barclays bid, mostly in shares, was worth EUR 63.9 billion. Either takeover, if it succeeds, would be the largest in the history of the financial industry.
The decision marks a significant break with the bank's previous policy, which has largely been to favour the Barclays bid overtly and at times covertly.
Separately, ABN reported net profit for the second quarter of EUR 1.16 billion, down 4.1 percent from EUR 1.21 billion, due to higher taxes and a worse result from the company's U.S. mortgage business.
Discussing the Barclays bid, the boards praised it for being "consistent with ABN Amro's previously articulated strategic vision."
In addition, Barclays' recently announced strategic cooperation with China Development Bank "should further enhance the growth opportunities of a potential combined Barclays/ABN Amro group in the attractive Asian market and could result in creation of additional longer-term value for ABN Amro shareholders."
However, the boards said the financial difference between the two bids was simply too great to ignore.
Discussing the RBS bid, the boards said that "whereas sources of integration risks are broadly similar to those identified for the Barclays offer ... (there are) significant unresolved questions about the proposed break up of ABN Amro and the proposed methodology of the consortium to implement such a break up."
Under the RBS bid, Fortis NV of Belgium would take ABN's Dutch operations, Banco Santander Central Hispano SA wants its Brazilian and Italian arms, and RBS wants the rest, including ABN's investment banking arm.
The battle for ABN has been stretching on for months now.
The Dutch bank announced it planned to merge with Barclays in March.
But after RBS signaled in April that it intended to make a higher offer for ABN, the Dutch bank's Chief Executive Rijkman Groenink agreed to sell ABN's U.S. arm, LaSalle Bank Corp., to Bank of America Corp. for USD 21 billion (EUR 15.5 billion).
The surprise move was widely seen as a poison pill measure to frustrate RBS, which also wanted LaSalle. It led to a rebellion by ABN shareholders who saw it as a betrayal of their interests to favour a less lucrative deal, and a spate of lawsuits by competing banks and shareholder groups that froze the takeover fight for two months.
Ultimately, the Dutch Supreme Court ruled the sale was legal and binding, and the RBS consortium pushed ahead with its higher offer anyway on July 18.
Groenink has been sidelined from negotiations, and ABN has promised not to unexpectedly sell any more operations.
On July 23, Barclays increased its offer to narrow the gap with RBS, on the condition that ABN continues to endorse their merger.
In Monday's statement, ABN said it had amended their agreement: although the requirement that ABN recommend the Barclays offer remains, the Dutch bank "will be free to discuss the consortium offer with the consortium and its advisers."
"ABN Amro will further engage with both parties with the aim of continuing to ensure a level playing field and minimizing any of the uncertainties currently associated with the offers with a view to optimising the attractive alternatives available to ABN AMRO's shareholders," they said.
[Copyright AP 2007]
Subject: Dutch news