Fortis wins shareholder backing for ABN takeover

BRUSSELS/UTRECHT (Reuters) - Belgian-Dutch financial group Fortis (FOR.BR) secured overwhelming shareholder approval on Monday to raise 13 billion euros ($18 billion) to finance its part of a bid for ABN AMRO AAH.AS.

Monday's vote clears a major hurdle for the mostly-cash 71 billion euros offer by Fortis (FOR.AS), Royal Bank of Scotland (RBS.L) and Spain's Santander (SAN.MC) for the Netherlands' largest bank in a bidding war for what will be the biggest ever bank takeover.

Approval by Fortis shareholders of its proposed purchase of ABN AMRO's Dutch operations and the rights issue gives the RBS-led consortium a boost at a time when the rival Barclays (BARC.L) bid is suffering from the decline of its share price.

Barclays formally launched its mostly share bid of 65 billion euros on Monday.

Over 90 percent of votes at Fortis shareholder meetings in Brussels and the Dutch city of Utrecht backed both Fortis's proposed bid and the rights issue, one of Europe's largest ever.

ABN's management said it would hold a shareholder meeting on September 20 to discuss the competing offers. Its fate, however, will be determined by which bidder its shareholders choose before the offers expire in early October.

Analysts had expected Fortis to win approval even though its shares have fallen almost 20 percent since it announced that it would contribute 24 billion euros to the deal.

ABN has made clear that it prefers to merge with Barclays and expressed doubt over the financing for the consortium's offer, mostly hinged on Fortis's fundraising.

"We've proven that all of these concerns are no concerns at this stage," Fortis Chief Executive Jean-Paul Votron told reporters in Utrecht after the final vote.

MERGER MATERIALISING

Fortis shares, about 1 percent weaker in early trading, slipped lower after the vote and closed down 1.4 percent at 28.05 euros. ABN shares ended up 0.7 percent at 35.29 euros.

"Fortis shares are down, because there will probably be a dilution of profit due to the share issue. The acquisition is materializing more and more," said Theodoor Gilissen analyst Gert-Jaap Kraan.

Fortis wanted shareholders at its two meetings to back its vision of becoming the biggest bank in the Benelux.

Calling it "fantastic news", Chairman Maurice Lippens called the vote a strong indication that its shareholders had "total trust" in the bank's management and board of directors.

Fortis needed a 50 percent vote in favor of the deal and 75 percent for its planned rights issue of the shares represented at both the Brussels and Utrecht meetings. It easily cleared these marks with 90-plus percent of shareholders voting for each measure.

Bid partner RBS welcomed the overwhelming endorsement and said the focus was now on its shareholder meeting on Friday. Its shareholders are widely expected to back the takeover plans.

Barclays declined to comment but said it continued to believe its offer would ultimately deliver more value with low risk to ABN shareholders.

Barclays has promised to keep ABN largely intact and make Amsterdam the combined group's headquarters. ABN backed Barclays' original offer in April but withdrew its formal recommendation last week.

In an unusual joint statement from ABN and the consortium on Sunday, the two sides said they would maintain constructive dialogue. ABN has made clear, however, that it prefers the Barclays offer.

Barclays' offer period will run from August 7 until October 4, Barclays said in a statement published in a Dutch newspaper on Monday. The RBS consortium's offer period started on July 23 and runs until October 5.

Either bid will be declared unconditional if it gets more than 80 percent of shares tendered.

Fortis also said on Monday that it was confident that the Dutch central bank and European regulators would approve the consortium's proposal, hopefully by the October 5 tender offer deadline. On Monday, the European Commission cleared Barclays's proposal to merge with ABN.

(Additional reporting by Darren Ennis in Brussels, Gilbert Kreijger in Utrecht and Steve Slater and Clara Ferreira-Marques in London.)