Barclays considers new ABN Amro offer

by Gill Montia

Story link: Barclays considers new ABN Amro offer

Barclays is reported to be considering enhancing its takeover bid for the Dutch bank, ABN Amro, with €65bn (£44bn) in cash. Whilst ABN has agreed Barclays’ all-share offer, Royal Bank of Scotland, Santander and Fortis are also in the bidding with an offer worth €71bn, largely comprising cash.

Barclays’ shareholders are exerting increasing pressure on the bank not to overpay for ABN, and at the same time, Atticus, the activist fund manager is urging Barclays to abandon the bid on the grounds that ABN is an inferior business. ABN’s share price has been steadily falling and investors are expressing concerns that the bidding may continue for some time yet.

Barclays is unlikely to undertake a rights issue to raise cash for the takeover and in any event, this could be provided by some of the proceeds from the sale of LaSalle, ABN’s American business. The Bank of America has agreed to buy for LaSalle for $21bn (£10.5bn) and whilst it has been agreed that €12 billion of the sale proceeds will be returned to Barclays and ABN shareholders, the parties could convert this into a new cash element of the acquisition. It would be equivalent to around 18% of the total value of the transaction.