British bank Barclays and Dutch rival ABN AMRO has finally announced that Barclays has concluded ABN acquisition deal worth just over 67 billion euros or $91.2 billion. The takeover has marked the biggest bank takeover till date. The offer represents 36.25 euros per share and includes 3.225 Barclays shares for each of ABN Amro’s, the banks said in a statement today. The takeover would also witness Barclays shareholders own a controlling 52 percent stake in the new business, which will be called Barclays but it’s headquarter will be located in Amsterdam.
Following the deal both the companies have said there will be about 12,800 job cuts, at the same time around 10,800 positions will be transferred to low-cost locations. The two companies at present have a combined workforce of 217,000. Barclays’s acquisition of Amsterdam-based ABN Amro, the largest Dutch banking company, would create a bank with more than 8,200 branches spread out from India to Brazil. The proposed merger is likely to be concluded during the fourth quarter of this year, with Barclays’ chief executive John Varley set to lead the combined group.
The proposed deal could still be threatened by a rival-bid from Royal Bank of Scotland, which has been working on possible acquisition in combination with Spain’s Santander and Fortis of Belgium. The consortium is scheduled to meet with the Dutch bank today. However, according to movement in the market there are strong chances that other parties could offer a counter bid at a higher price. According to experts the consortium may be able to pay 40 euros a share or more for ABN by eliminating more jobs and overlapping Barclays. Nevertheless the main contention is how difficult would it be to get such a deal accepted by management.
John Varley, with the takeover, would be able to establish Europe’s second- biggest bank by market value behind HSBC Holdings Plc and double its revenue from consumer banking. Varley has said in his statement, ‘The proposed merger represents a unique opportunity to create a new competitive force in financial services, which will deliver benefits for our customers and clients’.
In the mean time, the UK’s Financial Services Authority has expressed strong reservations saying the Dutch central bank should become its lead regulator following a takeover of ABN Amro. FSA officials are resentful over the fact that Barclays’ centre would shift to the Netherlands following the takeover of ABN Amro, even though the combined bank’s headquarters will move to Amsterdam.
