Barclays to Sweeten Offer for ABN Amro -- FT

Barclays is planning to add cash to its all-stock offer for ABN Amro, according to the Financial Times. The move is a response to the increase by a rival consortium, led by the Royal Bank of Scotland, of the cash portion of its offer from 79% to 93%. That revision was made following the decision by the Dutch Supreme Court permitting ABN to proceed with the sale of LaSalle Bank, an asset RBS was hoping to acquire as part of the larger transaction. "We'd always prefer to get LaSalle but we didn't and it does not undermine the rationale for the rest of the transaction," said RBS CEO Sir Fred Goodwin. Several major Barclays shareholders question the wisdom of Barclays' acquisition of ABN. "Our view is that graceful withdrawal is the best option for Barclays management as to match or better the offer would be value destructive," said Robert Talbut, CIO of shareholder Royal London Asset Management. Some RBS investors, too, are wondering why RBS is still interested in ABN now that one of its primary assets is off the table. Barclays might use prearranged sales of ABN assets, like its Italian and Brazilian units, as a means of raising cash for a sweetener, although Barclays has said part of the point of buying ABN is to expand in those markets. If it does go that route, it might have a buyer in BNP Paribas, which wants to continue its expansion in Italy.

Sources: Wall Street Journal, Financial Times
Commentary: RBS Consortium Ups Cash Ante for ABN Amro • Atticus Capital: We Can Block Barclays' Bid for ABN • Barclays Might Sweeten Bid for ABN -- FT
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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