Consortium seen ahead in battle for ABN AMRO

AMSTERDAM (Reuters) - The prospect of three European banks winning control of ABN AMRO rose on Tuesday after their consortium unveiled details of its bid to buy the Dutch bank for 71.1 billion euros (48.2 billion pounds), mostly in cash.

The ball is now in ABN’s court, as it weighs up the proposal by the Royal Bank of Scotland, Fortis and Santander against an all-share offer by Barclays valued at 64 billion euros.

ABN’s management is recommending the deal with Barclays, but given shareholder opposition to its parallel deal to sell U.S. unit LaSalle, which was suspended by a Dutch court and is now mired in a legal struggle, analysts say that ABN will have little choice but to put the two rival bids before shareholders.

Although Barclays could be pressured into raising its offer, analysts said that the consortium still had the upper hand.

“We continue to believe that the consortium is in a strong position to pay more than Barclays,” said Simon Willis, analyst at NCB Stockbrokers, in a note.

In a poll conducted by Reuters last week, seven out of 11 analysts said they expected the consortium to win control of ABN AMRO, citing the higher price and likelihood that shareholders would endorse the deal.

Key to any deal is the fate of LaSalle Bank.

A Dutch court froze ABN’s $21 billion (10.6 billion pounds) agreement to sell LaSalle to Bank of America after shareholders argued that it prevented another bidder from making an offer for all of ABN and should be put to a shareholder vote.

The Barclays offer is conditional on the successful sale of LaSalle to Bank of America, while the consortium made its offer conditional on the Chicago-based bank remaining part of ABN.

The Dutch Supreme Court is expected to rule on appeals by ABN and Bank of America on the suspension of the LaSalle deal in mid-July.

Bank of America has sued ABN, but the U.S. bank is also in talks with RBS that could lead to a settlement.

RBS Chief Executive Fred Goodwin told reporters on Tuesday that talks with Bank of America were “professional and amicable” but gave few other details.

In the same survey six out of seven analysts thought the parties would reach a settlement regarding LaSalle.

“The chance is high that the consortium bid will be valid,” said Rabo Securities analyst Cor Kluis.


Questions remain over the timing of an extraordinary meeting of ABN shareholders and how the bank will draft its proposals for a shareholder vote.

ABN has promised that it will hold a meeting for shareholders to “express their views” but has not made clear the timing or agenda, but a source familiar with ABN’s plans said the proposals were likely to include the consortium’s offer.

When announcing the deal with Barclays on April 23 ABN originally indicated that it would hold a shareholders’ meeting in August for a vote on the deal.

The RBS consortium said on Tuesday that it would provide more details by the first week of July on its offer, with the goal of launching a formal offer on August 13, subject to LaSalle being kept part of ABN.

“The litigation issue over the sale of LaSalle to Bank of America remains a significant hurdle but the terms of this offer are attractive, particularly the cash component,” said NCB’s Willis.

Barclays, which wants to increase its exposure to fast-growing markets in Brazil and Asia, shot back on Tuesday, saying that the consortium’s announcement contained “nothing surprising.”

One new detail that emerged on Tuesday was a contingency built into the consortium’s 38.40 euros per share offer for ABN of 1 euro to pay for any costs related to settling the LaSalle dispute. That, analysts said, implied an effective offer price of 37.40 euros.

In response, ABN shares fell 1.4 percent to 35.58 euros by 1300 GMT on Tuesday in Amsterdam. RBS shares were down 2 percent, Fortis was down 0.7 percent and Santander was unchanged in late afternoon trade. Barclays shares were down 0.3 percent.

The other possibility is an agreed deal between ABN and the consortium.

Goodwin of RBS, who said he was in regular contact with ABN’s chief executive Rijkman Groenink and chairman Arthur Martinez, said the consortium would prefer an agreed deal with ABN’s management but also indicated the group would go direct to shareholders if necessary.

Goodwin declined to say, however, whether the consortium was willing to make a public offer for ABN’s shares.

“It may come to a situation where shareholders vote with their shares,” said one analyst who declined to be named.