To win the contentious takeover battle for ABN Amro, Barclays is close to an agreement to sell a large stake to Chinese and Singaporean governments, which will raise cash around $20.56 billion (’10bn) to finance its takeover of the Dutch bank giant ABN.
The successful tie up would allow Barclays to increase its offer for ABN and include more cash in the deal. It is understood that if Barclays acquires ABN, the Chinese stake would be sold at about 7% in the enlarged British group. Market gurus believed that Barclays would increase its offer to $102.84 billion (’50bn), beating a $98.72 billion (’48bn) bid from a consortium led by Royal Bank of Scotland. Dutch regulators have given the bank two weeks to table a formal offer.
London-based Barclays is trying to beat RBS-led consortium in a battle that has dragged on for months. The bidding battle for ABN has been tied up in legal and strategic disputes over what would be the world’s largest banking acquisition.
Earlier, Barclays had offered $92.55billion (’45bn), but RBS-led consortium toppled it with $98.72billion (’48bn) bid to ABN Amro. The Chinese and the Singapore government are reported to pay about 740p for each Barclays share. If Barclays fails to buy ABN, the Chinese and Singapore investment authorities would take smaller stakes in the British bank.
The Barclays can announce its plan anytime today, while the size of Singapore government stake in Barclays isn’t clear, a Barclay’s stake of 5% to 10% would be worth about $4.8 billion to $9.6 billion, based on Barclays’s market value.
The takeover battle for ABN Amro is turning sour as it’s progressing. Barclays has been in talks with ABN since last year, and made an all-share offer to buy ABN this year. Barclays is under intense pressure from ABN shareholders to increase its bid. But, it has struggled to reconcile this demand with fears expressed by its own shareholders that already it is overpaying for the Dutch bank.
