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RBS-led consortium favored as ABN Amro shareholders discuss rival takeover bids

RBS-led consortium favored as ABN Amro shareholders discuss rival takeover bids

ABN Amro's chief executive downplayed chances a consortium of banks led by Royal Bank of Scotland PLC could fail in its euro70.2 billion (US$97.4 billion) bid to buy the Dutch bank as shareholders met Thursday to discuss rival takeover offers.
The RBS consortium has emerged ever more clearly as the favorite to buy ABN Amro Holding NV in recent days, after receiving a key approval from Dutch financial authorities and as turmoil on global credit markets has not worsened.
The consortium's mostly cash takeover still faces hurdles, but if successful would be the largest in the history of the financial industry.
Rival bidder Barclays PLC has watched the chances for success of its mostly stock offer fall along with the recent market downturn. At Wednesday's closing prices, its offer was worth about euro60.8 billion (US$84.3 billion) _ around 14 percent less than the RBS-led bid.
Both bids could theoretically still fail, but Chief Executive Rijkman Groenink said that was unlikely.
"The market expects that the overwhelming majority of shareholders will chose for the consortium's bid," Chief Executive Rijkman Groenink said, reassuring shareholder Gerda Blom that a scenario where either the consortium or Barclays failed to gain a clear majority was "highly theoretical."
The informational meeting Thursday is followed by the expiration of Barclays' bid on Oct. 4 and RBS's on Oct. 5.
Among the consortium, Fortis NV of Belgium wants ABN's Dutch operations, Banco Santander Central Hispano SA of Spain wants its Brazilian and Italian arms, and RBS wants the rest, including ABN's investment banking arm.
As late as Sunday, the boards said they could not endorse either bid, arguing that the Barclays takeover was more consistent with ABN's own strategy and that the consortium bid was worth more but carried greater risks.
"That argument still stands," Groenink said at the start of the meeting Thursday.
But he was sharply challenged by some shareholders.
"You said, Mr. Groenink, that a board is expected to act with a sense of neutrality and objectivity," said Ayo Deji. "I want to take you to task on that very point."
He said Groenink had improperly favored the Barclays bid, especially in the early phases of the fight for ABN Amro, when hedge fund TCI had demanded in an open letter that the bank should split and sell itself, due to underperformance.
Groenink said the bank could still not endorse the consortium bid because it would amount to a "carve up" of ABN Amro.
The Barclays merger would largely leave ABN intact _ except for its U.S. arm, LaSalle Bank Corp., which Groenink agreed to sell to Bank of America Corp. in April for US$21 billion (euro15 billion), in what was widely seen as a poison pill measure to frustrate the RBS-led group.
That move led to a legal fight that stalled both takeovers for months before being resolved by the Dutch Supreme Court. Groenink was then removed from active negotiations.
"You ran to Barclays in desperation, the same desperation with which you ... within four days ... managed to sell LaSalle for US$21 billion, without considering any other options," Deji said.
Groenink said there was still a risk the RBS offer could fail to arrange financing, but conceded it was unlikely.
"Despite the fact that markets are very troubled ... and access to credit markets are very cramped, neither the ring of underwriters led by Merrill Lynch, nor the consortium has" invoked a "material adverse change" clause that would allow them to lower their offer or walk away from the deal in light of market circumstances, he said.
"We can deduce from that ... that if the situation remains as it is today, or as it has improved in the past several days, that there would be little reason for them to invoke it, and little legal ground to do so."
ABN shares were down 0.2 percent to euro36.60 (US$50.76) in Amsterdam. That's 3.7 percent below the current value of RBS's bid, euro37.89 (US$52.57) per share, signaling that investors still have some doubts about whether it will succeed.
After the Dutch central bank and finance minister said they would not block a consortium takeover Monday, the consortium needs approval only from the European Union, which said Wednesday it had approved the Santander and RBS parts of the deal, and would rule on Fortis by Oct. 3.
Fortis said last week that EU objections "related to the market for small and medium-sized enterprises in the Netherlands," and it had presented "remedies" that it expected would allow the deal to go through.
Barclays CEO John Varley conceded that the Dutch green light was "very helpful to the consortium," in a letter to employees filed with the U.S. Securities and Exchange Commission on Wednesday.
ABN's boards and Groenink have vowed to help make a deal with RBS succeed, if it is the one shareholders approve.
A spokesman for ABN's European Worker's Council said it didn't have a preference for either deal, with an estimated 23,000 jobs lost or outsourced in a merger with Barclays, focused in Britain, and 18,000 lost in a deal with the consortium, focused on the Netherlands.
"The impact will vary from country to country and what we want most is to end the uncertainty," said Hans Westerhuis.