Court ruling on LaSalle expected
13 July 2007, AMSTERDAM (AP) - A court ruling Friday is expected to break a stalemate between rival bidders for ABN Amro Holding NV, paving the way for a resolution to the largest takeover battle in the history of the financial industry.
13 July 2007
AMSTERDAM (AP) - A court ruling Friday is expected to break a stalemate between rival bidders for ABN Amro Holding NV, paving the way for a resolution to the largest takeover battle in the history of the financial industry.
Although Friday's decision by the Dutch Supreme Court will not be the last word on whether ABN will be bought by Barclays PLC or by a rival consortium led by Royal Bank of Scotland PLC, it is likely to clarify an important side issue: whether ABN can sell its Chicago-based LaSalle Bank arm to Bank of America Corp.
The fight over ABN ran into a legal quagmire when it unexpectedly agreed to sell LaSalle Bank Corp. to BofA for US$21 billion (EUR15.5 billion) in late April. The move was widely seen as a poison pill measure intended to favour the management-approved merger with Barclays and thwart RBS, which wanted to buy LaSalle itself.
Amsterdam's Superior Court blocked the sale in early May, arguing that it should have been put to a shareholder vote because it was a major strategic decision intricately linked to a takeover of ABN.
That decision was appealed by Bank of America, which says that its purchase contract was made in good faith with ABN's management and is enforceable.
The Dutch government's top lawyer advised the court in a written opinion last week that the Superior Court ruling should be overturned. Although that advice is not binding, the court follows it in the large majority of cases.
If that happens, the path ahead is reasonably clear.
Experts say that Bank of America's legal standing is strong in the U.S., and if the Dutch court agrees the sale was legal, RBS and its partners must concede the loss of LaSalle or begin an uphill legal fight on both sides of the Atlantic.
"The Bank of America complaint was so cogent, so succinct that (ABN's not selling LaSalle) would be a straightforward case of breach of contract that it's not even just a legal question, it's a question of corporate strategy," said Anthony Sabino, a professor of business law at St. John's University.
If the ruling goes against the consortium, "I think they'll forego any attempts to obtain LaSalle ... but they might say 'look, we could still put together a lower offer for the remaining operations of ABN that edges out Barclays'."
He pointed out that without LaSalle, the "new" ABN Amro would include an attractive cash pile of US$21 billion.
Barclays has proposed an all-share merger worth EUR 63 billion or EUR 34.05 per share at current levels. The RBS consortium's mostly cash offer is worth EUR 70 billion or EUR 38.29 per share.
ABN shares rose 1.8 percent to EUR 35.23 Thursday, suggesting considerable doubt as to which offer will prevail.
Analysts from Keefe, Bruyette and Woods predicted the consortium will rebid.
"In our view, there are strong incentives for the consortium not to modify the current offer structure too much," they said in a research note.
RBS partner Fortis NV of Belgium wants ABN's Dutch operations, while Banco Santander Central Hispano SA of Spain wants its Italian and Brazilian operations. Even without LaSalle, RBS is interested in ABN Amro's investment banking operations and the rest of its global operations unclaimed by Fortis or Santander.
If the court decision goes as expected, the RBS consortium doesn't have much time to decide whether it will indeed press on with a revised offer. July 23 is the deadline set by Dutch financial regulators.
ABN Amro would hold an informational shareholder meeting in August to discuss the bid or bids, with an approval meeting likely in October.
However, if the court upholds the Superior Court ruling after all - or produces a surprise decision such as remanding the case to the Superior Court for further consideration - investors will face another long period of legal uncertainty.
"The worst ruling they could make is to sit on the fence," Sabino said. "What everybody needs is clarity on how to proceed. The losers will live to fight another day."
[Copyright AP 2007]
Subject: Dutch news