ABN Asks RBS for More Details as Legal Battle Brews
Dutch bank ABN Amro has asked suitors led by Royal Bank of Scotland to provide more details of the financing and structure of a planned $98 billion offer that could scupper its agreed deal with Barclays.
In a letter sent to the consortium of banks on Tuesday and obtained by Reuters, ABN said it needed more elements to assess the cash-and-shares proposal that seeks to trump an $88 billion takeover by Britain's Barclays, and said it also wanted more certainty on the consortium's funding.
The RBS-led trio, which also includes Spain's Santander and Dutch-Belgian group Fortis, said last week it was considering an offer for ABN Amro and on Friday notified ABN's board that it intended to go ahead, preparing the way for an unsolicited bid as early as this week.
ABN's board favours a deal with Barclays, and its executives have said they want to build up, not break up the bank.
But the bank is under growing pressure from shareholders to consider alternative suitors and faces an increasingly acrimonious fight with investors who last week backed a motion to sell or break up the group to maximise value, as well as an international legal battle.
At least two shareholders have filed lawsuits in an effort to stop the Barclays deal and the sale of ABN's U.S. unit LaSalle, a key asset for suitor RBS, to Bank of America .
A Dutch court is due to decide on Thursday whether to uphold the planned sale of LaSalle, after shareholder group VEB said it was unlawful and hindered a takeover by RBS.
If the judge upholds the deal, the consortium would need to bid for LaSalle by midnight on May 6. If not, it could trigger a lengthy battle over the U.S. unit alone, with Bank of America already signalling it would take legal action if the deal fails.
Separately, investor Halpert Enterprises filed a suit in New York against the bank seeking class action status, saying the board should withdraw its blessing for Barclays and scrap the LaSalle sale, described in the filing as "wrongful, unfair and harmful" to shareholders.
ABN opened its books to RBS last week and, after a heated shareholder meeting, later lifted a key confidentiality provision that would have precluded a hostile bid for 12 months.
But the bank said on Tuesday it needed more details in order to be clear on "the nature and extent of any financial, operational and regulatory issues which are likely to either increase the closing risk of any offer, or impact ABN Amro shareholders going forward."
A takeover of ABN, set to be the biggest-ever bank takeover to date, would be complex for a single bidder and even more so for the consortium, bidding in a format largely unprecedented in banking deals.
The three banks are understood to have largely agreed the split of ABN's assets, and a source familiar with the matter said on Monday that the consortium, advised by Merrill Lynch, was finalising financing plans for the offer, set to include some 50 billion euros ($68 billion) in cash.
Santander plans to sell its minority stake in Italian bank Intesa Sanpaolo and oil company Cepsa to help finance its offer, and would also raise funds through a rights issue, the source said. Fortis is also expected to raise funds through a rights issue.
ABN said it was "keen to pursue discussions on a constructive basis" but said it needed more reassurance.
"Are Royal Bank of Scotland and its shareholders going to underwrite this entire amount or will there be interdependency on Grupo Santander and Fortis disposing of existing assets and undertaking substantial capital raising?" the ABN letter said.
It also asked for details of how its revenues, expenses, capital and group debt would be split if taken over by the trio.
"ABN Amro has acted in a clear and transparent manner," it said. "We would respectfully request that the consortium commit themselves to acting in a similarly transparent manner and agree to furnish full details of any legally binding arrangements, agreements or guarantees they have signed between them or with third parties."
An ABN spokesman confirmed the letter had been sent, but declined to comment on its content.
RBS declined to comment.