Consortium of banks outbid Barclays offer

A consortium of European banks led by the Royal Bank of Scotland Group has made an official offer to purchase the Dutch bank ABN Amro for €71.1 billion. This price significantly exceeds the offer already accepted by the management of the Dutch bank from the British bank Barclays. According to experts, ABN Amro shareholders are likely to prefer the consortium's proposal, despite the fact that Barclays, unlike the consortium, promises to preserve the integrity of the bank.

Yesterday, a consortium consisting of the Scottish bank Royal Bank of Scotland Group (RBS), the Spanish Santander and the Belgian-Dutch Fortis announced its readiness to pay €71.1 billion for the Dutch bank ABN Amro. Fortis provides 33.8% of the offer (€24 billion), laying claim to the Dutch branches of the bank and the asset management company. RBS will contribute 38.3% (€27.2 billion) with the intention of acquiring the investment arms of ABN Amro and LaSalle. Santander will pay 27.9% (€19.9 billion) and buy the Italian and Brazilian divisions of the bank. This bid significantly exceeds the offer of the British Barclays (€67 billion), which promised to preserve the integrity of ABN Amro. The consortium said in a statement that 79% of the offer would be in cash, with the remaining 21% to be paid in shares of the merged bank, resulting in a total of €38.40 per ABN Amro share. The proposed price reflects a significant premium to the €36.25 per share that Barclays is willing to pay.

“We believe that the combination will strengthen our position in all strategic markets where ABN Amro is present,” said RBS Chairman Fred Goodwin. Completion of the offer is scheduled for the fourth quarter of this year, but during the week before July 2, 2007, the consortium will issue a special statement on a more specific timeline. Through the acquisition, banks expect to achieve cost reductions of €4.23 billion and increase profits by €1.22 billion by 2010.

In addition, the consortium announced its intention to continue the fight with Bank of America (BofA) for the American division of ABN Amro - LaSalle. Let us recall that it should be sold as part of the merger agreement with Barclays for $21 billion. ABN Amro made a corresponding statement at the end of April, but the sale has not yet taken place, since a Dutch court froze the deal, claiming that ABN Amro management tried sell a division without the consent of shareholders. At the same time, BofA filed a lawsuit in a US court, trying to argue that all proceedings relating to the LaSalle deal should be heard in the US. At the same time, at the beginning of May, the consortium already offered to buy out the American bank for $24.5 billion, but was refused by the management of ABN Amro. Now, the consortium has said it is withholding €1 per share from the offer until the proceedings are terminated to compensate for possible costs and penalties associated with the LaSalle court decision.

ABN Amro has not yet commented on the banks' proposal. According to bank spokesman Jochem van de Larschot, "ABN Amro has received an offer from the consortium and is considering it." Analysts are positive about the consortium's application. According to NCB brokerage company expert Simon Willis, the new terms of the consortium “should appeal to ABN Amro shareholders, since the premium to the Barclays offer is quite high and could tilt the balance of power in favor of the consortium.”

Marina Kommersant-Chistyakova

ABN Amro will be sold piecemeal