The consortium led by the Royal Bank of Scotland that is competing with Barclays to buy ABN Amro has doubled its stake in the Dutch bank through derivatives trades, the Financial Times reported Wednesday. The consortium, which also includes Belgo-Dutch group Fortis and Spanish bank Santander, submitted a U.S. regulatory filing stating it holds swaps and options over more than 76 million ABN shares, representing more than 4% of ABN's share capital. That is in addition to the consortium's existing 4% stake in ABN. According to the FT, the disclosure demonstrates how the consortium has taken advantage of market upheaval to build a large position in ABN at a steep discount to its €71 billion ($100 billion) bid, which is worth over €38 per share. The paper writes that the derivatives benefit the consortium whenever the share price rises above €34. "In total," the FT reports, "the share trading is thought to have in effect reduced the purchase price of ABN by €600-700m, or about 1% of the total consideration." The consortium's offer, which is well ahead of Barclays' €31 per share bid, will close at the end of next week.
Sources: Financial Times, Reuters
Commentary: ABN Amro Board Calls RBS Bid Superior, But Won't Back It • ABN Amro Board Disappoints Investors • RBS Consortium Adds to ABN Amro Stake
Stocks/ETFs to watch: ABN, RBSPY.PK, BCS, FORSY. Competitors: HBC, DB, UBS. ETFs: RKH, EWN, KBE
Earnings call transcript: ABN Amro Q2 2007
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