Rival bid for ABN Amro Is $98.5 billion
Royal Bank of Scotland, the British bank, and two other European lenders today offered 72.2 billion euros, or $98.5 billion, for ABN Amro, the largest Dutch bank, triggering one of the biggest takeover battles in the banking industry.
Royal Bank of Scotland, together with Banco Santander Central Hispano, Spain’s largest bank, and Fortis, a Belgium banking group, offered 39 euros a share in stock and cash for ABN Amro.
Their offer, 70 percent in cash and the rest in stock, trumps a 36.25 euros all-share recommended offer made by Barclays, another British bank, on Monday.
The bid by the Royal Bank of Scotland group depends on ABN Amro keeping LaSalle Bank, its American operation, which is considered one of its most attractive assets. On Monday, ABN Amro announced that it had agreed to sell LaSalle to Bank of America in what was widely seen as an attempt to discourage an approach by the Royal Bank of Scotland consortium.
If successful, the Royal Bank of Scotland bid would likely lead to a break up of ABN Amro, something the Dutch bank has said it is eager to avoid.
Rijkman Groenink, ABN Amro’s chief executive, has in the past said that he would reject any plans to split up ABN Amro, where he has spent almost all of his career.
Before today’s offer, he had said that he would prefer a combination with Barclays, which would create one of the world’s largest banks, to any approach that would break up ABN Amro.
On Monday, Mr. Groenink said that he did not think dividing the bank up made financial sense.
Some analysts said that the battle for ABN Amro would not be decided on price because of Mr. Groenink’s eagerness to avoid a division of the bank. He could argue, they said, that there is more long-term value for shareholders if ABN Amro merges with Barclays to create a larger bank instead of being split among three rivals.
Today’s counteroffer also depends on the Royal Bank of Scotland group getting financial information about ABN Amro.
Other analysts said that shareholders may still opt for the higher takeover offer.
The Children’s Investment Fund, an activist hedge fund investor in ABN Amro whose pressure on the bank’s management board to boost the share price triggered the start of takeover talks with Barclays earlier this year, today called the offer by the Royal Bank of Scotland consortium “compelling.”
The London-based fund, which owns less than 3 percent in the Dutch bank, also said that ABN Amro must now allow the Royal Bank of Scotland group full access to the same financial information it has already given to Barclays.
It said that ABN Amro should recommend the offer, and terminate the sale of LaSalle.
(Published by The New York Times, April 25, 2007)