posted by Bina | Monday, July 16, 2007
The Royal Bank of Scotland-led consortium on Monday detailed its new offer for ABN Amro, holding its bid for the Dutch bank at the same price but lifting the cash element to 93 per cent of the €71.1bn ($98bn) total value.
Jane Croft on the revised by RBS-led consortium for ABN Amro
The per share offer, which is competing against a rival all-share bid from Barclays, remains at €38.40 even though the deal no longer includes LaSalle, the US bank which ABN Amro has agreed to sell.
The consortium, which includes Santander of Spain and Belgo-Dutch bank Fortis, said its revised offer was the most valuable option for ABN Amro and worth 13.7 per cent more than Barclays’ offer based on Friday’s closing share prices.
Sir Fred Goodwin, chief executive of RBS said: “It’s materially higher than their [Barclays’] offer.”
The Barclays bid is worth around €64bn, or almost €4 a share less than the consortium bid.
It is now up to Barclays to decide whether to raise its offer. The UK bank has until July 23 to submit a new one.
Sir Fred said he was prepared to “expect the unexpected” from Barclays. He said RBS shareholders were supportive of its continued interest in ABN Amro, and he had been encouraged by assurances from the Dutch bank that the two bids would be dealt with on a level playing field.
The consortium needed to change its original offer which had been conditional on ABN Amro not selling LaSalle, after the Dutch Supreme Court ruled last Friday that ABN Amro could go ahead with the $21bn sale to Bank of America.
Sir Fred said “we would have preferred to get LaSalle, there’s no two ways about that.” But he added that “we never thought of withdrawing. Going ahead without LaSalle is every bit as attractive as going ahead with it.”
The contribution of Santander and Fortis to the consortium bid is unchanged as, if the original bid had succeeded, RBS was to have owned LaSalle.
Under the new offer, RBS would take the cash ABN Amro is receiving for LaSalle so RBS’s contribution to the new offer is of €16bn in cash – net of the LaSalle proceeds – including €5bn in equity.
As a result, the revised consortium bid comprises €35.60 a share in cash and 0.296 new RBS shares for each ABN Amro share. The total cash consideration would be €66bn, up from €56bn in the earlier bid.
RBS said it would buy ABN Amro’s global wholesale business and international retail businesses. It said the transaction would provide “enhanced growth prospects and attractive financial returns”.
It has adjusted its forecasts of synergies it could achieve in North America, because of the LaSalle sale, and now predicts cost savings of €1.24bn plus its €82m share of central costs savings, and net revenue gains of €481m by the end of 2010.
The internal rate of return on the transaction was estimated at 15.5 per cent post-tax by RBS, comfortably above its 12 per cent hurdle rate. It expects the acquisition to deliver a post-tax return on investment of 13.2 per cent in 2010 and to increase its earnings per share by 2 per cent in 2009 and by 7 per cent in 2010.
Sir Fred said buying ABN Amro “remains compelling from a financial point of view” and would produce “essentially the same earnings enhancement for the group, despite the smaller size of the transaction.”
In early trading ABN shares were 2.9 per cent higher at €36.90. RBS rose 1.2 per cent to 647½p while Barclays gained 2.4 per cent to 741 ½p.
Jane Croft on the revised by RBS-led consortium for ABN Amro
The per share offer, which is competing against a rival all-share bid from Barclays, remains at €38.40 even though the deal no longer includes LaSalle, the US bank which ABN Amro has agreed to sell.
The consortium, which includes Santander of Spain and Belgo-Dutch bank Fortis, said its revised offer was the most valuable option for ABN Amro and worth 13.7 per cent more than Barclays’ offer based on Friday’s closing share prices.
Sir Fred Goodwin, chief executive of RBS said: “It’s materially higher than their [Barclays’] offer.”
The Barclays bid is worth around €64bn, or almost €4 a share less than the consortium bid.
It is now up to Barclays to decide whether to raise its offer. The UK bank has until July 23 to submit a new one.
Sir Fred said he was prepared to “expect the unexpected” from Barclays. He said RBS shareholders were supportive of its continued interest in ABN Amro, and he had been encouraged by assurances from the Dutch bank that the two bids would be dealt with on a level playing field.
The consortium needed to change its original offer which had been conditional on ABN Amro not selling LaSalle, after the Dutch Supreme Court ruled last Friday that ABN Amro could go ahead with the $21bn sale to Bank of America.
Sir Fred said “we would have preferred to get LaSalle, there’s no two ways about that.” But he added that “we never thought of withdrawing. Going ahead without LaSalle is every bit as attractive as going ahead with it.”
The contribution of Santander and Fortis to the consortium bid is unchanged as, if the original bid had succeeded, RBS was to have owned LaSalle.
Under the new offer, RBS would take the cash ABN Amro is receiving for LaSalle so RBS’s contribution to the new offer is of €16bn in cash – net of the LaSalle proceeds – including €5bn in equity.
As a result, the revised consortium bid comprises €35.60 a share in cash and 0.296 new RBS shares for each ABN Amro share. The total cash consideration would be €66bn, up from €56bn in the earlier bid.
RBS said it would buy ABN Amro’s global wholesale business and international retail businesses. It said the transaction would provide “enhanced growth prospects and attractive financial returns”.
It has adjusted its forecasts of synergies it could achieve in North America, because of the LaSalle sale, and now predicts cost savings of €1.24bn plus its €82m share of central costs savings, and net revenue gains of €481m by the end of 2010.
The internal rate of return on the transaction was estimated at 15.5 per cent post-tax by RBS, comfortably above its 12 per cent hurdle rate. It expects the acquisition to deliver a post-tax return on investment of 13.2 per cent in 2010 and to increase its earnings per share by 2 per cent in 2009 and by 7 per cent in 2010.
Sir Fred said buying ABN Amro “remains compelling from a financial point of view” and would produce “essentially the same earnings enhancement for the group, despite the smaller size of the transaction.”
In early trading ABN shares were 2.9 per cent higher at €36.90. RBS rose 1.2 per cent to 647½p while Barclays gained 2.4 per cent to 741 ½p.
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