By Stephanie Van Den Berg / AFP
Amsterdam: ABN Amro, at the centre of the world’s biggest banking takeover bid, said Sunday that a three-bank consortium led by the Royal Bank of Scotland would likely beat a rival offer by Barclays.
Four days ahead of an extraordinary shareholders meeting to mull the twin bids, the Dutch bank said it was not recommending either offer to shareholders, but chairman Rijkman Groenink said the Barclays bid would “probably” fail.
When asked outright if he thought Barclays would succeed, he told the Dutch NOS television channel, “probably not”.
“We really have to assume that the markets will not change the coming weeks and accordingly the chance that the Barclays shares will rise enough to surpass the consortium bid are fairly small,” he explained.
The Barclays bid was valued at 67.5 billion euros ($93.48 billion) when it was first announced on July 23, but its value has now dropped to around 60 billion euros because of a fall in the price of Barclays shares. The offer is partly a share swap.
ABN Amro initially backed the Barclays bid but it withdrew support in June after the consortium of RBS, Belgian-Dutch Fortis and Spain’s Banco Santander made a far more substantial offer.
The consortium bid is valued at around 71 billion euros with 90% offered in cash.
But the main reason not to back the consortium offer is because the board of ABN Amro does not want to see the break-up of the bank as envisaged by the consortium.
“As the board of directors we cannot get ourselves to recommend the split up of the bank to our shareholders,” Groenink said.
“ABN Amro will continue to engage with both Barclays and the consortium to facilitate removal of uncertainties and conditions where possible and the ABN Amro boards have offered to support the transition of ABN Amro under both offers,” the bank said in its official advice to shareholders.
“While recognising the strategic benefits of the combination with Barclays,” the ABN Amro boards are “not in a position to recommend the Barclays offer for acceptance to ABN Amro shareholders from a financial point of view,” the bank said Sunday.
It said it recognized the “clearly superior value” of the consortium bid for shareholders, which the bank calculates as giving a 20% premium on the Barclays’ offer.
The neutral stance was in line with analysts’ expectations. “It’s pretty much what we expected,” an RBS spokesman told AFP in London in an initial reaction.
Rival Barclays refused comment on Sunday.
ABN Amro has scheduled a shareholders’ meeting on September 20 to discuss the rival bids, with many shareholders thought to prefer the consortium offer. There will be no votes at the meeting, ABN said.
On Monday, the Dutch finance ministry will announce if there are any objections to the proposed takeover of ABN Amro by the consortium. It gave the Barclays offer the green light a month ago.
Last Friday, a Barclays shareholders’ meeting backed the British bank’s takeover plans.
However Barclays chief executive John Varley stressed at that meeting that the bank was “prepared to walk away if we can’t conclude the transaction on the right terms.”