Tuesday, June 26, 2007

ABN can sell LaSalle, top lawyer advises

ABN can sell LaSalle, top lawyer advises
By Peter Thal Larsen, Banking Editor
Copyright The Financial Times Limited 2007
Published: June 26 2007 08:54 | Last updated: June 26 2007 12:51

Investors’ hopes for a full-blown takeover battle for ABN Amro suffered a setback on Tuesday when a senior Dutch legal official argued that the Dutch bank did not need to put the sale of its US subsidiary, LaSalle, to a shareholder vote.

Peter Thal Larsen on what ABN Amro’s freedom to sell La Salle would mean for RBS and Barclays’ takeover hopes
In an eagerly-awaited opinion, the attorney-general to the Dutch Supreme Court recommended that it overturn an earlier decision by the Enterprise Chamber, which had ruled that ABN Amro could not sell LaSalle without approval from shareholders.

The opinion, a summary of which was published on the Supreme Court’s website on Tuesday morning, is the first indication of which direction the Supreme Court might rule when it considers an appeal early next month.

Though the court can ignore the attorney-general’s opinion, Dutch lawyers said it takes the same view in three out of four cases. However, lawyers also stressed that the current case is unprecedented in Dutch legal history and is therefore almost impossible to predict.

If the Supreme Court were to follow the attorney-general’s lead, it would represent a blow to the Royal Bank of Scotland-led consortium which has mounted an €71bn (£47.8bn, $95.5bn) break-up bid for ABN Amro.

The consortium’s offer is conditional on it being able to buy the whole of ABN Amro including LaSalle, and will lapse if the supreme court decides a shareholder vote is not needed.

The attorney-general’s opinion may prompt the RBS consortium to make a renewed effort to strike a deal with Bank of America, which agreed to buy LaSalle for $21bn at the end of March. The two sides held talks last month about carving up LaSalle between them, but these discussions broke down over price.

However, the RBS consortium could also decide to press ahead by making an offer for ABN Amro excluding LaSalle – putting it in direct competition with Barclays, the British bank that has already agreed a takeover of the Dutch bank.

The attorney-general did not offer an opinion on whether ABN Amro’s board had treated shareholders fairly by selling LaSalle. However, he argued that the Enterprise Chamber had stretched the definition of the law by deciding to impose a shareholder vote under section of article 2.8 of the Dutch commercial code, which sets out principles of fiduciary duties.

The Enterprise Court’s ruling in early May had decided to ignore article 2.107, which sets out what proportion of its assets a company can sell without seeking approval of shareholders, but concluded that a shareholder vote was still required because the sale of LaSalle was inextricably linked with the negotiations with Barclays.

The attorney-general argued that confidence in the rule of law demanded that such a decision be based on a broadly accepted interpretation of the law, which was lacking in this case.

As a result, he advised the Supreme Court to dismiss the Enterprise Chamber’s ruling.

In lunchtime trading Tuesday, ABN shares were 0.7 per cent lower at €34.20. Barclays was 1.6 per cent lower at 708½p and RBS was up 5½p at 645½p.


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