A Dutch court is deliberating whether ABN Amro can go ahead with the sale of U.S. unit LaSalle to Bank of America, with a decision due this week that could derail a proposed $88.5 billion merger between ABN and Barclays.
After a hearing on Saturday in Amsterdam, a commercial court judge said he would decide on Thursday, May 3, whether to grant Dutch shareholders group VEB's request to hold up ABN's $21 billion LaSalle deal. VEB says the sale is unlawful and makes it hard for other banks to bid for ABN, the Netherlands' largest bank.
Bank of America agreed to buy LaSalle from ABN last week, in a related deal to Barclays' offer to buy ABN, although other banks can make competing offers for the Chicago-based bank up until May 6.
Royal Bank of Scotland, Santander and Fortis said on Friday they were ready to make an unsolicited offer for ABN AMRO, and had already indicated earlier in the week that they were willing to pay as much as 72 billion euros for all of ABN.
RBS is mainly interested in LaSalle, so the separate deal with Bank of America was seen by RBS, investors and analysts as a "poison pill" that makes it difficult for rival bids for ABN.
Legal Battle Possible
Should the court agree to VEB's request, it could trigger a lengthy legal battle on both sides of the Atlantic Ocean, which could potentially derail the sale of LaSalle and make it easier for the RBS consortium or a rival bidder to knock out Barclays' bid for ABN.
ABN could face damages claims from Bank of America, potentially in the billions, ABN Chief Executive Rijkman Groenink told reporters after the court hearing.
"The risks are that Barclays adjusts or withdraws its bid and that claims weigh on (ABN's) share price and bid price," he said.
RBS was also in talks to buy LaSalle, ABN Amro confirmed on the sidelines of the court hearing.
"Royal Bank of Scotland is working to close a confidentiality agreement to start due diligence on LaSalle and make a possible bid," ABN spokesman Jochem van de Laarschot said, adding that around 10 banks were interested in LaSalle and that one had already signed a confidentiality agreement to do due diligence.
RBS declined to comment. The bank, together with Spain's Santander and Belgian-Dutch bank Fortis could bid for LaSalle, but it would be conditional on the consortium also buying the rest of the ABN group, sources said earlier this week.
During the five hour hearing in a courthouse filled with about 130 people, VEB's lawyer Jurjen Lemstra argued that the sale of LaSalle violated Dutch laws and regulations as it should be considered as a "major transaction" that required approval from shareholders.
Lemstra added that the sale was an "unlawful protection measure as the bank (ABN) had to know that selling LaSalle would impede the sale of ABN."
"It was clear that Royal Bank of Scotland was interested in LaSalle," Lemstra said.
ABN's Argument
ABN Amro's lawyers reiterated the bank's view that the LaSalle sale was not a transaction that required approval from shareholders and that the deal with Bank of America was not a protection measure as it did not prevent others from bidding for LaSalle and ABN's other businesses.
If the judge, Huub Willems, issues an injunction holding up the LaSalle deal it could cause Bank of America to seek remedies in the United States, ABN lawyer Margaret Tahyar said.
The lawyer representing Bank of America said: "The bank would be damaged in a serious way if the (LaSalle) agreement would be suspended or not executed."
ABN would breach the agreement if it proved that ABN was not allowed to sell LaSalle without shareholders' approval, he said.
Groenink argues ABN does not have to seek shareholder approval for the deal since LaSalle represented less than a third of the bank's total assets. He said ABN had agreed to the deal with Bank of America to raise the value of a bid by Barclays and that the bank's management had decided in February to sell LaSalle.
Groenink told the court: "This is for me a very sad day. ABN has become the playground of hedge funds, speculators, and arbitrators."