RBS Consortium Ups Cash Ante for ABN Amro

The RBS-led consortium vying with Barclays for ABN Amro, unfazed by last week's decision by the Amsterdam Supreme Court permitting ABN to sell LaSalle Bank to the Bank of America, has raised the cash portion of its €71.1 billion ($98 billion) bid for the Dutch banking giant. The other parties in the consortium are Spain's Banco Santander and the Belgian bank Fortis. The consortium confirmed its prior offer of €38.40 per share and increased the cash proportion to 93% from 79%. Barclays' offer, which is all stock, is 11% lower at €34.49 per share. RBS CEO Fred Goodwin, who wanted LaSalle as a means of building up RBS's U.S. operations, said Monday the acquisition of ABN "remains compelling" even without LaSalle because it will provide new avenues for growth. "I still question whether they are right to take on all the execution risk without LaSalle,'' said Oriel Securities analyst Mike Trippitt. "LaSalle for them was the real gem." ABN shares were up as much as 4.5% in Amsterdam trading by mid-morning Monday. Shares of RBS are down 3.7% since it announced its intention to acquire ABN in May. Barclays will now have to choose between increasing its bid, introducing a cash element, joining forces with another bidder or selling one of ABN's assets to stay in the running with RBS.

Sources: Reuters, Wall Street Journal, Bloomberg
Commentary: Dutch Supreme Court: ABN Amro Can Proceed with LaSalle Sale • Dutch Advocate General: ABN's Sale of LaSalle Does Not Require Shareholder Vote • 17 Ways to Invest in The Netherlands
Stocks/ETFs to watch: ABN Amro Holding N.V. (ABN), Barclays PLC (BCS), Bank of America Corp. (BAC), Royal Bank of Scotland Group plc [ADR] (RBSPY.PK), Fortis NV [ADR] (FORSY). Competitors: HSBC Holdings plc ADR (HBC), Deutsche Bank AG (DB), UBS AG (UBS). ETFs: iShares MSCI Netherlands Index (EWN), streetTRACKS KBW Bank (KBE), HOLDRS Regional Bank (RKH)

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Comments

[dkp]

Avoid this Dance of the Elephants.