ABN Set to Sell LaSalle to Bank of America
By Peter Thal Larsen in London and Ian Bickerton in Amsterdam
Copyright The Financial Times Limited 2007
Published: April 23 2007 03:00 | Last updated: April 23 2007 03:00
ABN Amro was last night finalising a takeover bid from Barclays, in a €70bn (£48bn) deal that includes the sale of the Dutch bank's US subsidiary to Bank of America for $21bn (£10.5bn).
According to people close to the situation, ABN Amro's supervisory board agreed yesterday to recommend the British bank's offer, clearing the way for the two banks to announce the terms of their deal today. However, any announcement could be delayed by a last-minute hitch.
A deal would mark the culmination of more than a month of talks between Barclays and ABN Amro. Their merger would create one of the world's largest banks by market capitalisation. Barclays' all-share offer is understood to value each ABN Amro share at about €36 - near where its shares closed on Friday.
ABN Amro is expected to announce its intention to sell LaSalle, its US subsidiary, to BofA for $21bn as part of the deal. Barclays is expected to justify the bid - a substantial premium to the price at which ABN Amro's shares were trading before the sides began exclusive talks - by outlining potential cost savings worth at least €3bn.
John Varley, Barclays chief executive, would run the combined bank while ABN Amro is expected to nominate Arthur Martinez, chairman of its supervisory board, to be chairman.
Rijkman Groenink, ABN Amro chief executive and the main target of a campaign by activist investors impatient with the bank's performance, is expected to take a less senior role. The combined bank would retain the Barclays name, though its headquarters would be in Amsterdam.
But the deal is unlikely to mark the end of the saga. ABN Amro's executives are today due to hear details of a rival break-up bid by Royal Bank of Scotland, Santander of Spain and Fortis, the Belgo-Dutch financial group.
The chief executives of RBS, Santander and Fortis are expected to outline a proposal that would offer shares in RBS with the other two banks contributing cash. It remains unclear how Santander and Fortis would finance their part of the offer.
Under the terms of the deal with Barclays, ABN Amro is expected to retain the right to consider any higher offers. ABN Amro's supervisory board has been threatened with legal action by The Children's Investment Fund, the activist hedge fund.