/ 25 April 2007

RBS group unveils $98bn rival ABN Amro bid plan

A trio of banks led by the Royal Bank of Scotland (RBS) has proposed a €72-billion ($98-billion) bid for ABN Amro, threatening to thwart an agreed takeover of the Dutch bank by Britain’s Barclays.

The RBS group, which also includes Spain’s Santander and Dutch-Belgian bank Fortis, said on Wednesday it planned to offer €39 a share for ABN Amro, made up of 70% in cash and 30% in RBS shares.

The group said this was 13% higher than the value of the Barclays all-share offer at Tuesday’s close, and included ABN Amro’s final dividend for 2006 of €60 cents a share.

ABN Amro shares jumped more than 5% to as high as €37,2. Any takeover of ABN Amro would be the world’s biggest-ever bank deal.

”Ultimately it is a question of economic rationale, and there are higher-value owners out there than Barclays,” said one industry analyst. ”The ball is in Barclays’s court now, but it is unlikely they can offer much more than is already on the table.”

The RBS group said its proposal was contingent upon access to ABN Amro’s books and to Chicago-based LaSalle Bank remaining within the Dutch company.

ABN Amro, under pressure from investors such as activist group TCI to consider a sale following years of underperformance, angered the RBS group and some of its own shareholders by announcing the sale of LaSalle to Bank of America for $21-billion, with a break-fee of $200-million of the deal did not go through.

Critics viewed this as an attempt to block a competing bid for ABN Amro. Analysts expect the RBS group to break up ABN Amro, with RBS itself taking LaSalle.

”The banks believe that the potential transaction will create stronger businesses with enhanced market positions and growth prospects in each of ABN Amro’s main markets,” the RBS group said in a statement.

”The banks believe that execution risk would be lower than in a transaction with Barclays,” the statement added.

ABN Amro had no immediate comment. Barclays and TCI were not immediately available.

Responding to criticism of the LaSalle deal, ABN Amro published details of its sale of LaSalle to Bank of America, including the terms under which the deal could be broken.

”An alternative bidder has these 14 days to execute a definitive sales agreement for the same businesses on superior terms for cash and not subject to a financing condition,” the Dutch bank said a statement on Wednesday.

Bank of America has the right to match a new bidder’s proposal during the next five business days, it added. — Reuters