The Royal Bank of Scotland has announced that it and its partners; Santander of Spain and Fortis of Belgium, believe they could pay around 13 per cent more for ABN than what Barclays is offering. The consortium led by RBS has offered 72.2 billion euros $98.5 billion to acquire ABN Amro Holding NV, triggering off the biggest takeover battle in the financial-services industry. The Royal Bank-led group in its counter bid to topple Barclays bid, offered 39 euros a share, with 70 percent in cash and 30 percent in stock. The banks are seeking to trump the bid that ABN Amro agreed to accept from Barclays on April 23.
The move has marked the latest twist in a lingering battle for control of ABN Amro, which had appeared to have been won by Barclays when its offer, then worth €66 billion, was accepted on Monday, ahead of a meeting with the consortium banks scheduled for that afternoon. That meeting was then cancelled. In the meanwhile, British hedge fund TCI has said that Dutch bank ABN Amro should recommend a 72-billion-euro or $98 billion bid offer from a consortium led by Royal Bank of Scotland.
Interestingly, a side deal was arranged by ABN Amro to spin off its US banking LaSalle to Bank of America for $21billion or £10.5 billion had been largely considered as a poison pill planned to prevent RBS led consortium to takeover the bank. However, it is now clear that the RBS-led consortium is determined not to let it deter their offer. RBS is thought to want LaSalle and the Dutch bank’s wholesale banking operation as well as China and Asia. 
The latest approach by RBS immediately won the backing of London-based hedge fund TCI which has long been demanding the ABN Amro to boost the performance of the bank. TCI in its statement said, ‘The board of ABN Amro must recommend the RBS consortium offer, subject to the due diligence being met, and terminate the LaSalle bank sale.’
In an effort to address concerns that the offer, potentially the biggest ever carve-up of a bank, is actually too complicated. The offer has been structured using RBS shares as well as some cash. The Barclays deal is entirely in shares. Analysts believe that it’s a good counter-punch from RBS and the bid of 70 percent cash appears to be good compared with the 100 percent shares offer of Barclays. It definitely increases the danger of value dilution for Barclays shareholders should they wish to counter-bid.
The Royal Bank-led group has said in its official communique, ‘The banks are of the clear view that their proposals are superior for ABN Amro’s shareholders and are straightforward from a shareholder, regulatory and execution perspective’. The consortium also made it obvious that its approach is based on pre-conditions, one of which is that the LaSalle operation remains part of the ABN Amro group. The deal to sell LaSalle to Bank of America involves a $200 million break fee to the American bank.
