AMSTERDAM (Reuters) - A Royal Bank of Scotland-led consortium will most likely buy ABN AMRO as Barclays’ rival offer for the Dutch bank has little chance of matching the consortium’s bid financially, ABN’s chief executive told Dutch TV on Sunday.
The mostly cash bid of RBS, Belgian-Dutch financial group Fortis and Spain’s Santander, is currently worth about 70.2 billion euros ($97.4 billion), while Barclays’ part cash, part share offer is worth about 58.5 billion euros.
“The possibility is fairly small that Barclays shares will rise so that its bid for ABN AMRO will top the consortium’s bid,” ABN’s CEO Rijkman Groenink told Dutch news program NOS Journaal.
Barclays’ offer is currently 58 percent in shares, and the value of its offer fell 6.5 billion euros in two months time as its shares have dropped about 18 percent since half July when worries about the U.S. subprime mortgage market started to weigh on shares, financials in particular.
“We really have to anticipate that the markets will not change in the coming weeks,” Groenink said.
Asked whether a takeover by Barclays would be feasible, Groenink said: “Probably not.”
Although the consortium is making a cash-rich offer for ABN, they have yet to raise part of the funds. Most keenly watched is a 13 billion euros rights issue by Fortis because the recent credit squeeze has raised the cost for banks seeking to raise money.
ABN stuck to its neutral stance on the two competing bids saying in a statement that a takeover by Barclays fit with ABN’s strategy of keeping the Dutch bank in one piece but that the RBS-led consortium’s bid was financially superior.
“ABN AMRO boards are not in a position to support the break-up of ABN AMRO but acknowledge that the consortium offer ... is clearly superior for the ABN AMRO shareholders from a financial point of view,” ABN said.
The consortium wants to break up ABN, with RBS taking its investment bank and Asian businesses. Santander would get Italian bank Antonveneta and ABN’s Brazil business, and Fortis would take the Dutch retail bank.
ABN, the biggest bank in the Netherlands, withdrew its formal recommendation for Barclays in July but has said it still prefers the British bank’s bid over the consortium’s bid.
ABN said it would continue to talk to both Barclays and the consortium and support the takeover process under both offers.
The bank said it had continued to compare the bids with a stand-alone scenario and a “managed break-up alternative” but concluded that the offers were better than the alternatives, in particular due to execution risks of the alternative scenarios.
The Dutch Finance Ministry is expected to say on Monday whether it has any objection to the RBS consortium’s takeover plan. The Dutch bank will discuss the offers on Thursday with its shareholders at an extraordinary meeting.
Either deal would be the biggest bank takeover.
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