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RBS Group Wins 86% Backing For ABN Amro Bank

Reuters
Monday, 8 Oct 2007 | 11:16 AM ET

A Royal Bank of Scotland-led trio of banks said its offer to buy ABN Amro had been
accepted by around 86% of the Dutch bank's shareholders, paving the way for the consortium to clinch the $101.6 billion acquisition, the biggest banking takeover ever.

RBS and its partners, Spain's Santander and Belgian -Dutch group Fortis, have battled against British bank Barclays since April to buy ABN , and will now split the business up. Barclays conceded defeat on Friday.

Attention is now shifting to the unprecedented integration challenge ahead.

RBS and its partners will aim to move quickly to end seven months of disruption at and ease concern they have overpaid for the Dutch bank after this summer's credit crunch.

All three banks have a good track record for integrating acquisitions, but ABN will be the world's biggest bank takeover and poses complex cross-border and regulatory issues. Many see it as a test case for whether major group takeovers can work.

The consortium has until the end of this week to declare the bid unconditional, which in addition to ABN shareholder approval requires some other technical issues such as the closing of a 13 billion euro rights issue by Fortis.

The breakup of ABN will involve 4,500 branches across 53 countries and unraveling businesses ranging from cash management operations in Asia to retail banking in Brazil.

RBS missed out on getting ABN's prized U.S. bank LaSalle but will take its wholesale and investment banking business and its Asian operations.

Santander gets ABN's Italian and Brazilian units, while Fortis will get its Dutch business, as well as its wealth and asset management operations.

Each consortium member says it has delivered synergies from big deals in the past and can make ABN work for them. RBS alone expects to deliver cost savings of around 1.3 billion euros.

But a sharp deterioration in capital markets in August and September has raised concern the trio will struggle to achieve the revenue benefits they have projected, even if they should achieve cost synergies.

Barclays CEO John Varley said on Friday he believed the consortium had overpaid as ABN's intrinsic value had been affected by the market turmoil.

Barclays itself enters its first week since March without attention dominated by its pursuit of ABN. Some see it as takeover target, but analysts said the turbulent capital markets make it unlikely a rival would make such a big move so its executives are unlikely to come under immediate pressure.

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