U.S. News

ABN Amro LaSalle Sale was Legal: Dutch Government Lawyer


ABN Amro does not need shareholder approval to sell its U.S. arm, a top Dutch government lawyer said Tuesday in an advisory opinion that increases the chances that the bank will ultimately be bought by Barclays.

The sale of ABN's Chicago-based LaSalle Bank to Bank of America was blocked by Amsterdam's Superior Court last month, bringing the largest takeover fight in the financial industry's history to a standstill.

ABN Amro is at the center of a tug-of-war between two rival buyout offers from Barclays and a consortium of banks led by Royal Bank of Scotland.

Barclays' all share bid of roughly 61.9 billion euros ($83 billion) is worth at least 10% less than the mostly cash RBS offer, but it's dependent on the LaSalle sale going through. RBS wants LaSalle and its offer is dependent on the sale being blocked.

In a written submission to the Supreme Court, which is to rule on an appeal, Advocaat Generaal Levinus Timmerman said the sale was legal under Dutch law, and the Superior Court decision should be overturned.

The Superior Court had said that shareholders should have been consulted on the LaSalle sale, but Timmerman said the right of shareholders to approve a deal "must be founded on a widely accepted legal conviction, which is not the case in the present matter."

The Supreme Court almost always follows advice of the advocaat generaal, but is not bound to do so. Each party involved in the case will have a chance to respond to Timmerman's findings before the Supreme Court rules.

ABN Amro said it was studying the advocaat generaal's opinion and noted that it was an "opinion ... and not a judgment." It said it now expects a ruling in mid-July.

Dutch shareholders' union VEB said it would continue to lobby for the LaSalle sale to be unwound.

Boosts Barclays' Prospects

ABN Amro shares fell on the news, which brightens prospects for Barclays' lower offer. Shares dropped 1.8% to 34.12 euros ($45.93). Barclays shares fell 1.1% to 709 pence (10.64 euros, $14.14) in London.

At those levels, Barclays offer is worth 34 euros ($45.61) per share. RBS's offer is worth 37.40 euros ($50.17) - suggesting investors now believe Barclays is likely to win the bidding war.

ABN's management had agreed to sell LaSalle to Bank of America Corp. for $21 billion (15.5 billion euros) in what was widely seen as a poison pill measure to avoid a deal with RBS.

Shareholders protested, saying that such a large sale should have been put to a general meeting.

The Superior Court agreed, in part because the sale was tied to a buyout of ABN as a whole - which definitely requires shareholder approval.

But Timmerman focused instead on Dutch corporate law, which said shareholders need only be consulted on sales of assets that constitute more than a third of all operations.

That leaves open the possibility that shareholders could reject the Barclays merger even if the decision on LaSalle is taken out of their hands.

Notably, Timmerman explicitly stopped short of saying whether he thought ABN Amro's board of directors had acted "unlawfully with respect to its shareholders by selling LaSalle" against their apparent interest.

That leaves open the possibility that ABN Amro's management could be vulnerable to shareholder lawsuits for mismanagement in preferring Barclays' lower offer.