RBS Consortium Ups The Anty & Bids $95.6 Billion For ABN Amro, Outbidding Barclays (Part 1)

Implications: Key Implications: The RBS Consortium raised the stakes on 5.29.07, by making an official offer for ABN Amro of $96.5 billion, outbidding Barclays original offer of $91 billion.  The counter-bid by the Consortium trumps the all-stock, friendly takeover offer made by Barclays of $47.11 per share or a total of $91 billion.  The RBS Consortium raised the cash portion to 79% from 70% in their earlier proposal and the remaining 21% will be in stock. The deal is contingent upon ABN's shareholders rejecting the side deal ABN and Bank of America made for ABN's LaSalle Bank for $21 billion and the Dutch court upholding the LaSalle ruling, which froze the sale of LaSalle Bank.  Both ABN & Bank of America have filed separate appeals on the Dutch court's ruling over ABN's sale of LaSalle Bank to Bank of America.  The Consortium plans to set aside $2.5 billion of the offer price for the pending resolution of the LaSalle Bank deal amongst ABN and Bank of America.

Analysis: Comments/Perspective:
The RBS Consortium a.k.a. "The BanK," made an official offer for ABN Amro, usurping Barclays's offer and moving forward with a hostile takeover of ABN, which would be the world's largest financial services takeover.  The deal may open the door for other suitors who may counter-bid for ABN and it also gives Barclays an opportunity to mull over its options, review the Consortium's offer and decide whether to raise the stakes higher and outbid the Consortium or perhaps look for a partner(s) to outbid the Consortium and keep the bank in tact, rather than breaking up ABN and dispersing its business units between RBS, Fortis and Santander.

1.  The Dutch Enterprise Chamber court has ordered ABN to put the Bank of America offer of $21 billion for ABN's LaSalle Bank before its shareholders for a vote, which will take place some time in August 2007, in a special shareholder meeting.  The VEB shareholder association which includes TCI Fund Management, the activist shareholder who put the motion forward for ABN to be split up and put up for sale in February 2007, favors the Consortium's offer, however, if Barclays offers a higher counter-bid the shareholder association may be amicable to approving the ABN + Barclays + the side offer made by Bank of America for LaSalle Bank

2.  Although much of the friendly takeover bid between ABN and Barclays and the Consortium's hostile takeover has played out publicly, perhaps the most crucial part of the deal may have occurred behind the scenes with talks amongst the RBS Consortium and Bank of America in an attempt to come to a common agreement between the parties that may satisfy shareholders, employees and other stakeholders of all parties.  However, this seems like a pipe dream right now for the Consortium and although talks have occurred between the parties (The Consortium and Bank of America) to try and resolve the Bank of America offer for LaSalle BanK for $21 billion, a deal couldn't be reached and talks have halted, however, the Consortium is open to continuing further talks with Bank of America

3.  Bank of America could be the spoiler in the Consortium's hostile takeover plans for ABN, however, ABN's shareholders will play a pivotal role in the side deal between ABN and Bank of America for LaSalle Bank and the deal could be tied up in the courts for months or drawn out further if ABN and Bank of America continues the appeal process

In Part 2 of this saga I will discuss why Bank of America may be so interested in LaSalle Bank and why the Consortium has similar interests for LaSalle's business units and why LaSalle Bank has become the "prized jewel" in the deal, whether its with ABN + Barclays + Bank of America or the Consortium and I will also dissect the logistics of the Consortium's offer compared to the Barclays offer. Stay tuned!