In what some analysts are viewing as a tactical coup, Barclays has hired Citigroup as a financial advisor on its merger talks with ABN Amro, thereby removing it as a rival for the Dutch banking giant. Barclays' other advisors include Credit Suisse, Deutsche Bank, J.P. Morgan Cazenove and Lazard. Citigroup's CEO Chuck Prince was reportedly under internal pressure to put in a bid for ABN, but Citigroup is now precluded from acting in conflict with its client. Barclays' remaining potential rivals for ABN include Royal Bank of Scotland, BNP Paribas and Banco Santander Central Hispano. ABN's shareholders will vote in April on proposals by hedge fund TCI, an activist shareholder, on a possible break-up, sale or merger. Management is recommending shareholders opt for the Barclays deal. If the deal falls through, ABN is considering other means of returning cash to shareholders, including the sale of stakes in banks in the Middle East and Latin America. ABN shares have risen about 20% since TCI made its proposals.
Sources: Wall Street Journal, Reuters
Commentary: Citigroup Said to be Considering Rival Bid for ABN Amro • ABN Amro, Barclays Agree to Several Merger Issues • Barclays Approaches ABN Amro Regarding Possible Takeover
Stocks/ETFs to watch: Citigroup Inc. (NYSE:C), Barclays PLC [ADR] (NYSE:BCS), ABN Amro Holding N.V. [ADR] (ABN). Competitors: Deutsche Bank AG (NYSE:DB), JP Morgan Chase & Co. (NYSE:JPM), Lloyds TSB Group plc (NYSE:LYG). ETFs: First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL), PowerShares Intl Dividend Achievers (NYSEARCA:PID), iShares MSCI Netherlands Index (NYSEARCA:EWN)
Conference call transcripts: Citigroup Q4 2006
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