ABN supervisory board steps into takeover battle

AMSTERDAM Wed May 30, 2007 9:56am EDT

1 of 4. A general view of the head office of the ABN AMRO bank in Amsterdam, the Netherlands. March 20, 2007. A consortium led by Royal Bank of Scotland unveiled a bid for ABN AMRO on Tuesday.

Credit: Reuters/Robin van Lonkhuijsen

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AMSTERDAM (Reuters) - ABN AMRO AAH.AS said on Wednesday its supervisory board is taking a more active role in considering rival offers to buy out the Dutch bank, either of which would result in the biggest-ever banking merger.

ABN said it has received Tuesday's 71.1 billion euro ($95.6 billion), mostly cash offer by Royal Bank of Scotland (RBS.L), Fortis FOR.BR and Santander (SAN.MC), which rivals a 63.6 billion euro, all-share offer by Britain's Barclays (BARC.L) that has the endorsement of ABN's management.

In order to weigh the offers in "the interests of the Bank and its stakeholders", ABN said its supervisory board has formed a "Transaction Committee" with its own financial and legal advisers.

In the Netherlands, the supervisory board is equivalent to a board of directors, charged with overseeing a company's top management and shareholders' interests. A Dutch company's managing board consists of a firm's top officers, including the chief executive and deputies.

Analysts said ABN's reaction to the consortium's bid was positive, indicating the bank would seriously look at the offer.

"The Managing Board and the Supervisory Board will carefully consider the proposed offer and examine its implications for ABN AMRO, its shareholders and all other stakeholders," ABN said in a statement, referring to the RBS-led consortium's proposal.

But some analysts noted that a more active involvement by the supervisory board may not mean a change in ABN's position, which has so far favored a deal with Barclays.

"ABN cannot ignore the offer now and has to discuss it during a shareholders' meeting," Theodoor Gilissen analyst Geert-Jaap Kraan said. "But (ABN) could again come with arguments from the past, saying the bank's identity was better guarded with Barclays."

ABN Supervisory Board Chairman Arthur Martinez, Vice Chairman Andre Olijslager, and Rob van den Bergh will comprise the Transaction Committee, the bank said in a statement.

The step by ABN's supervisory board was also not a sign of a weakened position for ABN's Chief Executive Rijkman Groeinink but of the complexity of the takeover battle, analysts said.

In a side deal to the April 23 merger agreement with Barclays, ABN agreed to sell its U.S. unit LaSalle Bank to Bank of America (BAC.N) for $21 billion. This deal was frozen by a Dutch court after shareholders revolted, saying it prevented them from considering other offers apart from Barclays.

After the Dutch commercial court suspended the LaSalle sale, Groenink came under pressure from some shareholders to resign, but he has said his position had not been discussed internally.

ABN is considering an extraordinary meeting of shareholders, but has not yet indicated how it will craft proposals for a shareholder vote.

The negotiator for Dutch union De Unie, Gerwin van der Lei, endorsed the consortium's offer on Wednesday, saying there would be fewer job losses. If the RBS consortium took over ABN, it will cut 17,000 to 19,000 jobs, of which 7,500 would be in the Netherlands.

"I am more optimistic about the consortium. Looking at the promises, I expect that we can come to an agreement about a social plan for employees," Van der Lei said.

Under the Barclays deal about 23,600 jobs would be cut at a combined Barclays-ABN bank, with about half of those positions moved offshore.

ABN AMRO shares traded up 0.1 percent at 35.85 euros by 1241 GMT, compared to a 0.8 percent decline of the DJ Stoxx European banking sector index .SX7P.

The Barclays (BARC.L) offer of 3.225 of its shares for every ABN share was worth around 63.6 billion euros on Wednesday, or about 34.29 euros a share.

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