Defeat conceded in bid to buy ABN Amro

Oct 6 2007 by Iain Laing, The Journal

BARCLAYS has conceded defeat in its bid to buy Dutch bank ABN Amro after a six-month battle.

The withdrawal clears the way for a takeover of ABN by a rival Royal Bank of Scotland-led consortium, which outgunned Barclays with a higher £49.1bn offer.

Barclays said the costs of its bid had been covered by a £138.5m break fee agreed with the Dutch bank.

Barclays said it had withdrawn the offer after failing to gain the required backing from 80% of the Dutch bank’s shareholders.

Despite the failure of the bid, Barclays chairman Marcus Agius said: “The board is proud of the way Barclays senior management conducted the campaign for ABN Amro.”

Barclays’ bid – which is mainly in shares – fell to around £43bn as financial shares have been buffeted by the summer turmoil in global stock markets amid fears of exposure to losses on high-risk US mortgages. But some commentators said the defeat could be a “blessing in disguise” and praised Barclays for refusing to be drawn into a bidding war. Barclays sweetened the failure by announcing a £1.55bn share buyback programme.

It had been prepared to move the headquarters of the combined group to Amsterdam and even drop its famous eagle logo to create the world’s fifth biggest bank.

The RBS-led team, which refused to comment on Barclays withdrawal, also includes Spanish bank Santander and Fortis, of Belgium. The trio plan to break up ABN, with RBS taking its corporate banking and Asian businesses, and Fortis gaining the Benelux retail banking business. Santander would gain ABN’s Italian Antonveneta operation as well as the Dutch bank’s activities in Brazil.