ABN Amro's management and supervisory boards announced Monday they are rejecting a $24.5 billion bid for its U.S. unit LaSalle Bank by a consortium of three banks led by Royal Bank of Scotland. The boards stated the bid by the group is "not superior" to a previously accepted $21 billion bid by Bank of America [BoA] because of "uncertainty and execution risk" -- particularly with regard to as-yet incomplete fundraising by Fortis and Santander, the other two banks in the group. The boards also looked with disfavor on the consortium's insistence on accepting no liability for a pending BoA lawsuit against ABN for breach of contract, a demand it was said to concede late in the negotiations. (On Friday, BoA sued ABN in U.S. federal court for unspecified damages relating to the Dutch bank's retreat from the LaSalle transaction.) Nevertheless, in keeping with instructions by the Dutch commercial court following a suit last week by irate investors, ABN will put this and all other offers for LaSalle to a shareholder vote at an as-yet unscheduled Extraordinary General Meeting. The RBS-led bid for LaSalle is contingent on acceptance by ABN of the consortium's $98.5 billion bid for the whole of ABN, which tops the $88 billion offer from Barclays that ABN has already accepted.
Sources: MarketWatch, Wall Street Journal, Reuters
Commentary: Judge Orders Freeze of ABN Sale of LaSalle to BoA • ABN Shareholders Determined to Thwart LaSalle Sale to BoA; RBS-Led Consortium Reiterates Rival Bid • Memo to Barclays: ABN Amro's US Banks Are a Mixed Bag
Stocks/ETFs to watch: ABN Amro Holding N.V. (ABN), Barclays PLC (NYSE:BCS), Royal Bank of Scotland Group plc [ADR] (RBSPY), Fortis NV [ADR] (FORSY), Bank of America Corp. (NYSE:BAC). Competitors: HSBC Holdings plc ADR (HBC), Deutsche Bank AG (NYSE:DB), UBS AG (NYSE:UBS). ETFs: First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL), PowerShares Intl Dividend Achievers (NYSEARCA:PID), iShares MSCI Netherlands Index (NYSEARCA:EWN)
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