By Martijn van der Starre/ Bloomberg
Amsterdam: A Dutch court blocked ABN Amro Holding NV’s $21 billion (Rs85,953 crore) sale of LaSalle Bank to Bank of America Corp. because management failed to get shareholder approval for the deal.
“ABN Amro management has misjudged its task,” said Judge Huub Willems of the Amsterdam district court’s Enterprise Chamber in the ruling on 4 May, backing a complaint by the Dutch investor group VEB.
The decision may disrupt Barclays Plc’s $90 billion takeover of ABN Amro and open the way for a group led by Royal Bank of Scotland Group Plc to make a higher bid for the Amsterdam-based company. The VEB shareholder group argued to the court that the sale of Chicago-based LaSalle to Bank of America is aimed at thwarting a possible bid from Royal Bank for ABN Amro.
“It is much more likely that Royal Bank will win the day,” said Colin Morton, a Leeds-based fund manager at Rensburg Sheppards who helps manage $1.8 billion and owns Barclays and Royal Bank stock. “If it had been legally sewn up it would have been very difficult for the Royal Bank group,” Morton said.
ABN Amro shares rose 1.9%, to 36.60 euros in Amsterdam on optimism a higher bid will follow the ruling. Barclays shares jumped 3% to 744.5 pence, while Royal Bank slipped 0.7% to 1,963 pence ($39) in London. Bank of America’s stock rose 0.3% to $51.18 in New York.
Barclays, the third-largest U.K. bank, “is continuing to pursue its recommended merger with ABN Amro, which offers significant value to shareholders,” the London-based company said in a Regulatory News Service statement after the ruling. ABN Amro spokesman Jochem van de Laarschot said the ruling is “clear” and that the bank will respond at a later time.
Edinburgh-based Royal Bank, Santander Central Hispano SA and Fortis, the group considering a joint bid for ABN Amro, said in a statement that they would “await ABN Amro’s response to the court decision.”
“We expect an offer by the consortium tomorrow,” said Jean- Pierre Lambert, a London-based analyst at Keefe, Bruyette and Woods Ltd, who has “market perform” rating on ABN Amro.
Bank of America spokesman Robert Stickler, said in a telephone interview, the company has a “binding contract” and intends to “take all necessary steps to protect our legal rights.”
Hans de Savornin Lohman, a lawyer at Loyens & Loeff NV representing the U.S. bank, said in Amsterdam on 28 April that Bank of America may file a “substantial claim” in New York against ABN Amro if the sale is blocked.
Under ABN Amro’s agreement with Bank of America, the U.S. lender may be entitled to a payment of $200 million if the LaSalle sale is terminated.
The Children’s Investment Fund, a London-based hedge fund that encouraged ABN Amro to consider a breakup of the company in February, said the Dutch court’s decision is “an essential step in rectifying a flawed sales process.”
Shareholders have turned against the strategy of ABN Amro Chief Executive Officer Rijkman Groenink. About 68% of ABN Amro investors backed a motion put forward by the hedge fund at the bank’s annual general meeting last week to have the board consider a break up of the Dutch bank.
Groenink and Barclays CEO John Varley announced on 23 April that the largest Dutch bank would be bought by the British lender, and at the same time said LaSalle would be sold to Charlotte, North Carolina-based Bank of America. Two days later the Royal Bank-led group indicated it would pay 72.2 billion euros ($98 billion) in cash and stock for ABN Amro. That proposal is dependent on a reversal of the LaSalle sale.
“Justice has been done,” Jaap Koelewijn, a professor of corporate governance and corporate finance at Nyenrode Business Universiteit in the Netherlands, said in an interview. “One now has to bid for ABN Amro as a whole and Barclays will probably not be able to pay for that.”
The Dutch central bank is “studying” the court ruling and will keep monitoring developments “closely,” Tobias Oudejans, a spokesman for the Amsterdam-based bank, said by telephone.