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Impressive takeover
British Barclays valued ABN Amro at $91.2 billion
The purchase of the Dutch ABN Amro by the UK's third largest bank, Barclays, for more than 67 billion euros ($91.2 billion) will become the largest transaction in the global banking market. According to experts, the acquisition price was quite high. Meanwhile, it is unknown whether two large financial structures will be able to establish effective interaction. Both credit institutions announced their intentions to enter the Russian retail field, but analysts note that the merger will have almost no effect on our market.Yesterday Barclays said it would pay 3.225 new shares for each share of the Dutch bank, that is, 36.25 euros per share. This is 49% higher than the stock's average price over the last six months. Thus, the total amount of the transaction is estimated at 67 billion euros, or $91.2 billion. However, Barclays has already agreed to sell LaSalle Bank, owned by ABN Amro, to the American Bank of America for $21 billion. Thus, the Dutch bank will cost Barclays only 70 billion dollars. Nevertheless, this transaction will become the largest in the banking world. ABN Amro ranks eighth in terms of assets in Europe, has 4.5 thousand branches in 53 countries and total assets of about a trillion euros.
The last major deal in Europe took place in the summer of 2005: the Italian bank UniCredit decided to acquire the second largest bank in Germany, HypoVereinsBank, for $23 billion.
The newly formed credit institution, called Barclays Plc, will become the largest institutional asset manager and will serve 47 million clients. Barclays Chief Executive Officer John Varley and Barclays President Bob Diamond will retain their positions in the enlarged company, while ABN Amro Supervisory Board Chairman Arthur Martinez will become head of the new structure. At the same time, Barclays shareholders will control 52% of the new company. The single board of directors will include ten representatives from Barclays and nine from ABN Amro.
In addition to Barclays, the Scottish Royal Bank of Scotland (RBS), the Spanish Santander and the Dutch-Belgian Fortis showed interest in purchasing ABN Amro. According to the chairman of the board of directors of ABN Amro, Rijkman Groeninck, the bank's management will listen to other proposals, but "a merger with Barclays is the best option for ABN shareholders."
Russian analysts note that the deal took place at a very reasonable price for the Dutch. “The transaction P/BV indicator, that is, the ratio of the purchase price to the bank’s capital, is about 3.3,” notes Maria Kalvarskaya, senior analyst at the stock market analysis department of the investment bank KIT Finance. “For Western banks this is quite high, but for Russian banks it is not so significant.”
According to Anton Tabach, senior analyst at Uralsib FC, the main problem is the further interaction of two disparate companies: “The effectiveness of joint management of the financial structure depends on many factors. ABN Amro is a highly decentralized organization. Therefore, the question arises whether it will be able to get along with the rigid management system of the English Barclays.”
It is known that the Russian subsidiary of ABN Amro planned to enter the retail market this year. According to Mr. Tabakh, the current deal will delay the start of work with our compatriots, since this area is not core for the bank. “ABN Amro, of course, was represented on our market, in particular on the mortgage market, but was not particularly active,” the expert notes. “But if the Russian branch can act independently, Russian projects will be launched.” In February this year, Barclays announced its plans to become the first British bank to open a network of branches in Russia. According to the English newspaper The Times, he will enter this market by purchasing a small Russian financial institution. However, whether these plans remain in force is unknown.