The Wall Street Journal reports that a faction within Citigroup is urging Chairman and CEO Charles Prince to make a rival bid for Dutch bank ABN Amro, which is in merger talks with Barclays. The Barclays transaction would value ABN at approximately $80 billion, which would make it the biggest banking deal in history. Because ABN has announced that its negotiations with Barclays are exclusive, a move by Citigroup might be considered a hostile bid. Citigroup is said to be exploring the fit despite the notorious failure rate of hostile bids in the banking industry. The regulatory environment in the Netherlands is problematic, too, insofar as it places more roadblocks in the path of hostile takeovers than do other countries. An acquisition by Citigroup, if successful, would give it a greater presence in continental Europe and enhance its U.S. retail franchise through the accompanying acquisition of ABN's Chicago-based LaSalle Bank holding.
Sources: Wall Street Journal
Commentary: ABN Amro, Barclays Agree to Several Merger Issues • Barclays To Acquire ABN: Long-term Investor Horizon Required • ABN AMRO: Children's Investment Fund Urges Break-Up or Sale
Stocks/ETFs to watch: Citigroup Inc. (C), ABN Amro Holding N.V. [ADR] (ABN), Barclays PLC [ADR] (BCS). Competitors: Bank of America Corp. (BAC), Deutsche Bank AG (DB), JP Morgan Chase & Co. (JPM). ETFs: iShares MSCI Netherlands Index (EWN), WisdomTree High-Yielding Equity (DHS), First Trust Morningstar Div Leaders Index (FDL)
Conference call transcripts: Citigroup Q4 2006
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