U.S. News

NYSE Euronext Probes Trading Around ABN Amro


NYSE Euronext has joined Dutch and British financial authorities in examining trading patterns in ABN Amro 's shares and American depository receipts in the period before the multibillion euro (dollar) bidding war over ABN became public, the bank said Tuesday.

Separately, the Dutch Supreme Court said it has set Friday as the date for a key ruling in the fight between Barclays and a consortium of banks led by Royal Bank of Scotland to buy ABN Amro .

The 71 billion euro ($97 billion) takeover battle is the largest in the history of the financial sector, and dozens of major players on Wall Street and in the London financial world have been involved as stockholders, brokers or advisers to one of the parties.

However, there was nothing to indicate the NYSE investigation is more than a standard review it carries out when any publicly listed company is acquired.

"We have received a request from the NYSE regarding transactions ahead of the announcement of our merger talks with Barclays," spokesman Neil Moorhouse said, reading a prepared statement. He added ABN was cooperating with the investigation and said he couldn't comment on whether there was any specific reason to suspect insider trading.

ABN shares began a long upward trajectory in November 2006, that accelerated in February when hedge fund TCI demanded the company take drastic action to sell or split itself to improve returns to shareholders.

In March, ABN announced it was in merger talks with Barclays and in April RBS launched a counterbid.

AFM Warning

In May, the Dutch financial watchdog AFM warned parties involved in the takeover battle to disclose any market-sensitive information promptly. Although the AFM usually doesn't comment on whether it's carrying out an investigation, it was left little choice when Dutch shareholder rights organization VEB published correspondence from the AFM on May 24:

"The AFM suspects that there have been contacts between the VEB and one or more institutions or persons who were involved in some way in the bidding process around ABN Amro before the subject got going in the media on Feb. 20," the letter said.

The VEB said later that, on the basis of discussions with the AFM, it didn't believe any of its members were suspected of insider trading.

British media reported that Britain's Financial Services Authority also examined trading in ABN shares shortly before the RBS counter bid.

But regardless of the investigations, the fight over ABN Amro is far from over.

Dutch Supreme Court Ruling

The Dutch Supreme Court ruling will decide whether Amsterdam's Superior Court erred when it blocked ABN's sale of Chicago-based LaSalle Bank in early May.

ABN was in talks with Barclays and RBS had signaled its intention to launch a rival bid when ABN abruptly agreed to sell LaSalle to Bank of America for $21 billion (15.5 billion euros). That was widely seen as a poison pill measure, given that RBS also wants LaSalle.

At current levels, Barclays' all-share bid is worth 33.86 euros ($46.05) per share, or 62.7 billion euros ($85.3 billion). RBS's mostly cash offer is worth 38.31 euros ($52.10), or 71.0 billion euros ($96.6 billion). ABN shares are trading at 34.54 euros ($46.97), part-way between the two, suggesting investors are unsure which will prevail.

If the Supreme Court upholds the decision, a fight in U.S. courts over whether BofA's purchase contract is still enforceable looms.

If the Supreme Court reverses the lower court decision -- seen as more likely after an important government lawyer advised the court last week that it should -- RBS and its partners may give up on LaSalle, re-negotiate and come up with a new, lower offer for what remains of ABN.

In addition to LaSalle, RBS wants to buy ABN Amro's investment banking business, while partners Fortis of Belgium wants ABN's Dutch operations; and Banco Santander Central Hispano of Spain wants its Italian and Brazilian arms.

Both Barclays and the RBS group have postponed making their formal offers for ABN until after the Supreme Court ruling.