British bank Barclays has agreed to buy Dutch rival ABN AMRO for just over €67-billion as it seeks to head off rivals to clinch the world’s biggest ever bank takeover.
Barclays said on Monday it would pay 3,225 new shares for each ABN AMRO share, equivalent to €36,25 a share at Friday’s closing price, to create a banking giant with 47-million customers and the world’s biggest institutional asset manager.
The price, which includes the declared 2006 final dividend for ABN shareholders, is slightly higher than many analysts were expecting. But Barclays also said it had also agreed to sell ABN’s Chicago-based United States bank LaSalle to Bank of America for $21-billion, conditional upon its purchase of ABN.
Barclays has been forced to pay more by rival interest for ABN from a consortium led by Royal Bank of Scotland. The consortium, which includes Spain’s Santander and Dutch-Belgian group Fortis, will to meet ABN’s management later on Monday.
ABN chairperson Rijkman Groenink told reporters the ABN board would hear other offers in line with its fiduciary duties, but said a merger with Barclays was the ”best option” for shareholders.
Barclays chief executive John Varley told the same conference call: ”We have put a good price before ABN shareholders … My confidence is we will succeed.”
ABN came under pressure from investors, including British hedge fund TCI, to consider a sale or break-up to boost shareholder returns after several years of underperformance.
TCI said in a brief statement it was studying the terms of the Barclays/ABN deal and might comment further in due course.
Traders said Barclays shares were set to open down around 1%. They closed at 750 pence on Friday, valuing Britain’s third-biggest bank at about £49-billion.
ABN shares were indicated up 0,6% at €36,5.
Barclays said the combination would result in annual pretax synergy benefits of about €3,5-billion by 2010, and that it expected the deal to boost its earnings by 5% by the same date.
It said 23 600 jobs could be cut from the combined workforce, including 10 800 positions moving offshore.
Barclays shareholders will own about 52% of the enlarged company, to be called Barclays.
Barclays’ John Varley and president Bob Diamond will have the same positions in the enlarged group, and ABN’s Arthur Martinez will be chairperson.
Britain’s Financial Services Authority will be the lead regulator for the company.
Barclays said its bid was 33% above ABN’s closing share price on March 16, the day before the two firms said they were in talks. – Reuters