RBS-Led Consortium Says Financing Secure for ABN Amro Bid
A Royal Bank of Scotland-led consortium said it had secured financing for its proposed takeover of Dutch bank ABN Amro and said its plan had lower risk and not significantly more job cuts than a rival offer.
ABN, however, said it had not had any contact with the consortium since it rebuffed the proposed 71 billion euro ($96 billion) offer from the group on May 6.
ABN has agreed an all-share takeover by British bank Barclays , worth 63 billion euros, which RBS and its partners Santander and Fortis are trying to unravel.
Either deal would be the biggest-ever bank takeover.
After weeks of claim and counterclaim, Dutch market regulator AFM on Monday forced ABN and the consortium to publish letters, a memorandum and other recent correspondence.
The consortium confirmed its proposed offer was worth 38.4 euros per ABN share, comprising 27 euros in cash and the rest in RBS shares. It said it could adjust the offer, but the cash element would be at least 26 euros per share.
It said it would consider disposals, but a deal would not be conditional on any.
Talks between ABN and the consortium fell apart on May 6 as RBS and its partners said their offer was conditional on them also buying ABN's U.S. arm, Chicago-based LaSalle Bank.
The consortium offered $24.5 billion for LaSalle, which would go to RBS, trumping a $21 billion bid for the unit from Bank of America , but ABN said it would not accept the "interconditional" offers for LaSalle and the rest of ABN.
Break-Up and Issues
ABN said it still had not received full details of the consortium's financing of its proposal.
A letter dated May 3 and a May 5 memo from the consortium confirmed Fortis and Santander would issue equity to raise cash -- which could result in two of the biggest-ever rights issues.
RBS would issue shares directly to ABN shareholders.
Merrill Lynch, the consortium's adviser, would underwrite all equity and Tier 1 capital issuance, the letters said. Other banks, including some institutions advising ABN, had offered to help with any fundraising, one letter added.
The consortium would break up ABN, with Fortis getting the Netherlands, Private Clients and Asset Management. RBS would get North America, Asia, Global Clients, Europe apart from Italian unit Antonveneta, and the wholesale businesses excluding Brazil.
Santander would have Latin American retail and commercial banking businesses, Antonveneta and Interbank Consumer Finance.
The consortium said they would gain more synergy benefits than Barclays, but did not disclose the scale of cost savings.
ABN shares were up 0.6% at 35.43 euros, as analysts said the trio were likely to make a hostile move.
"I'd be amazed if they walked away," said Robin Down, bank analyst at HSBC. "The central prize is too great and they know they have a fairly broad sweep of shareholder support to do so," Down said, There was still scope for Barclays to add a significant cash sweetener, he added.
"I think it's still 50/50 at the moment. There's a lot that Barclays can do if they want to sweeten their own deal, but there's no incentive for them to do so until RBS shows its bid."
The takeover is also clouded by a legal dispute over ABN's side-deal to sell LaSalle to Bank of America, after a Dutch court ruled shareholders should vote on it. ABN appealed against the ruling and a decision is unlikely before September.
ABN said it intends "to provide details for a shareholders' meeting that allows full consideration of all available alternatives at that time."
ABN Chief Executive Rijkman Groenink, who has been criticised by shareholders including VEB for rejecting the bidding consortium, on Monday withdrew his nomination to sit on the board of oil company Royal Dutch Shell so he can devote his time to ABN.