In an interesting twist in the $80 billion ABN AMRO-Barclays merger story, British hedge fund TCI has announced that it will take legal action against ABN AMRO, which at present involved in vigorous exclusive merger talks with Britain’s Barclays. TCI has threatened that a legal course is inevitable unless the Dutch bank considers other offers for its business. TCI has argued that ABN should consider all offers before agreeing to a merger with Barclays.
The merger of the London-based bank with ABN, a Dutch rival, would help creating a $170 billion banking colossus. However, Barclays holders might face near-term dilution, and the integration does not seems to move smoothly. If Barclays, succeeds in acquiring the bank’s Dutch rival, the deal would mark the largest ever in the financial services industry. It would help creating one of the world’s largest consumer and investment banking groups, with operations in Europe, the Americas and the Middle East.
Talk of a potential deal has greatly surprised Barclays shareholders. Investors have expressed grave uncertainties about whether the merger would lead to a devaluation of their holdings or even if such a tie-up makes business sense. The disgruntlement among Barclays shareholders comes amid growing speculation that Royal Bank of Scotland (RBS) could launch a rival bid for all or part of ABN Amro.
However, experts have projected French bank BNP Paribas, HSBC and Citigroup, as well as Spanish banks BBVA and Abbey National owner Santander, as other possible counter-bidders.
In the meanwhile, Wall Street Journal has reported that some executives within Citigroup are pushing for the U.S. banking giant to make a bid for ABN AMRO. The report further said that Citigroup is studying whether to make a bid for ABN AMRO, the Netherlands’ biggest bank, and could make a hostile bid.
On the other hands, reports suggest that the exclusivity is to expire within 30 days. The pressure is certainly building up on Barclays to identify synergies and pitch an offer at a level to deter possible counter-bidders. And the things are apparently not easy as it also faces pressure from regulators and shareholders.
