The ABN Amro board told shareholders Sunday that although it is formally recommending neither a bid from Barclays nor a bid from a consortium led by Royal Bank of Scotland, it acknowledges the financial superiority of the latter offer. ABN CEO Rijkman Groenink told a Dutch news show he expects the consortium bid to win the day. The board said it views Barclays' all-share offer as more congruent with ABN's strategy but cannot recommend it over the consortium's €70.2 billion ($97.4 billion) bid, which is 19% richer at current prices and contains a cash component. Nor can it back the higher bid -- though it is "clearly superior...from a financial point of view" -- since the consortium's object is to break up ABN. The board said it considers the "post-acquisition business and integration risks" of the Barclays deal " ... manageable and acceptable," and pointed out that "the amount of...capital raisings yet to be completed by the consortium members...to fund the cash component of [its] offer is high in absolute and relative terms, and market circumstances are volatile." The board also noted that the consortium's bid -- unlike that of Barclays -- has yet to be approved by EC and Dutch regulators. Barclays shareholders overwhelmingly approved the prospective takeover Friday. In related news, U.S. Senators Barack Obama and Dick Durbin are seeking assurances from Bank of America about possible layoffs that could result from its purchase of LaSalle Bank from ABN -- a transaction on which the Barclays offer is contingent.
Sources: AP I, II, Wall Street Journal, MarketWatch, Reuters
Commentary: RBS Consortium Could Lower Bid for ABN -- Times of London • ABN Amro Takes Neutral Position Toward Bidders • ABN Amro Acquisition: Too Many Chefs Wearing the I-Bank Advisor Hat
Stocks/ETFs to watch: ABN, RBSPY, BCS, FORSY, BAC. Competitors: HBC, DB, UBS. ETFs: RKH
Earnings call transcript: ABN Amro Q2 2007
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