In an interesting development, Royal Bank of Scotland Group PLC chairman Tom McKillop has been warned by at least four leading institutional investors last week not to overpay for ABN Amro Holding NV. According to the reports shareholders are demanding detailed evidence on the cost and revenue savings that the consortium expects from a deal. The report further suggested that Merrill Lynch, as adviser to the consortium that includes Fortis and Santander Central Hispano has lined up European and US banks to endorse the offer, while Fortis has garnered informal support from investors for a possibly huge rights issue for its involvement.
As a matter of fact, both the firms RBS and Barclays are believed to be addressing City anxiety that they will be tempted to overpay for ABN Amro in a bidding war. According to reports, a string of regular meetings between the banks and their leading institutional investors have taken place to consider the matter. At the same time, the institutions are intensely worried as because so many of them have big cross-shareholdings in both RBS and Barclays.
The group led by the RBS is considering whether to make an unconditional offer for Dutch bank ABN Amro. The timetable for the conflict between the consortium and Barclays, which tabled a rival offer, has been snarled by an outbreak of legal action. ABN is now all set to appeal against the Dutch enterprise court’s verdict that the proposed sale of its US LaSalle bank to Bank of America, announced alongside Barclays’ offer, had to be approved by shareholders. That decision may not be announced until September, delaying the extraordinary general meeting to consider the deal.
The chairman of Bank of America has recently made it clear that his company had no plans to revise its offer of 21 billion dollars for US competitor LaSalle, a subsidiary of Dutch bank ABN Amro. He further said, ‘We have a contract in which ABN Amro guarantees that we can take over LaSalle without the approval of the shareholders’.
UBS has in the meantime acquired control of 5.3 percent of voting rights in ABN Amro. ABN shareholders are scheduled to vote on the sale of ABN’s LaSalle and other options at an extraordinary meeting. However, a date and the range of options have not been released yet. Reports are suggesting that UBS would have supported the LaSalle sale to Bank of America, which now is perceived as a favorable condition for Barclays.
Image
