Scottish bank leads $95 billion bid for ABN Amro

May 30, 2007|By New York Times News Service.

LONDON -- The Royal Bank of Scotland Group and two other European banks made a formal $95.6 billion bid yesterday for ABN Amro, the Dutch bank at the center of a bidding war with Barclays.

The bidders addressed concerns of shareholders by planning to set aside money for a possible lawsuit over the sale of LaSalle Bank, ABN Amro Holding NV's American unit, but have yet to resolve some regulatory and legal uncertainties.

Royal Bank of Scotland and its two partners, Banco Santander Central Hispano of Spain and Fortis, the Belgian financial services group, offered 71.1 billion euros for ABN Amro, or 38.40 euros for each ABN share.

About 79 percent of the offer, more than investors expected, will be paid in cash and the rest in Royal Bank of Scotland shares. An earlier offer from Barclays PLC, the British bank, is valued at 34.87 euros a share.

"The offer is now certainly more transparent than it used to be and the cash component is higher than we expected, which is positive, but uncertainties remain," said Ton Gietman, an analyst at Petercam in Amsterdam.

The group of three banks provided more details about how it planned to break up ABN and how it wanted to finance the bid. It also said that it planned to set aside about 1.85 billion euros of the bid "pending resolution of the LaSalle situation" but still needed approvals from regulators, ABN's shareholders and those of all three bidding banks.

Shares of ABN Amro fell 0.13 euro, or 0.4 percent, to 35.97 euros in Amsterdam, showing that investors remained skeptical about the consortium's bid.

Earlier this year, a Dutch court halted the sale of LaSalle Bank - which ABN had agreed to sell to Bank of America Corp. for $21 billion as part of the proposed Barclays deal - because ABN had not sought shareholder approval. ABN appealed the ruling, and a court decision is pending.

The Barclays bid for ABN Amro hinges on the successful sale of LaSalle, while the Royal Bank of Scotland Group said its bid was contingent on the LaSalle sale being reversed.

Bank of America said earlier that it would sue ABN if it broke the purchasing agreement for LaSalle, adding a legal risk to the rival bid.

ABN shareholders are to vote on the LaSalle sale at an extraordinary shareholder meeting. No date has been set.

In the meantime, both bidders will have to woo ABN shareholders, who may hold out for an increased offer from Barclays. Royal Bank of Scotland and its partners will have to convince ABN shareholders that its bid is superior to that of Barclays even though it may bear some risks.

Royal Bank and its partners said yesterday that "they will be able to create stronger businesses with enhanced market presence and growth prospects."

Barclays will need to explain to shareholders why they should opt for a lower bid and one that is all in shares.

ABN's management, which had said it preferred the Barclays bid because it avoided a breakup of the bank, criticized the Royal Bank of Scotland consortium for not guaranteeing financing for the bid.

The three banks said yesterday that Royal Bank will pay 27.2 billion euros, Fortis 24 billion euros and Santander 19.9 billion euros. Royal Bank of Scotland will issue about 15 billion euros of new shares to ABN shareholders and raise an additional 6 billion euros in capital.

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