Monday, March 19, 2007
Barclays makes informal takeover approach for ABN AMRO
By Julia Werdigier, IHT
Published: March 18, 2007
LONDON: Barclays, the British bank, has made an informal takeover approach for the Dutch bank ABN AMRO after its lagging share price was the subject of criticism last month from hedge funds, people with knowledge of the move said Sunday.
A takeover would be the largest ever cross-border merger in the banking industry and create a lender with businesses in America and Africa with a combined market value of more than £80 billion, or $155 billion. It would help Barclays compete with the only two larger British banks, HSBC Holding and Royal Bank of Scotland Group.
The contact between Barclays and ABN AMRO is preliminary, and there is no certainty that Barclays will make an offer, two people with knowledge of the approach said, declining to be identified citing confidentiality agreements.
ABN AMRO, based in Amsterdam, came under pressure from shareholders this year for failing to revive its share price, which lagged behind those of other banks for years.
The Children's Investment Fund, known as TCI, and Tosca, two funds that hold shares in ABN AMRO, called on Rijkman Groenink, the bank chief executive, last month to explore the options to sell, merge or spin off some of the assets, which they claim do not yield their full potential.
TCI, which owns about 1 percent of ABN AMRO, the biggest Dutch bank, is known for exerting pressure on management. The British fund successfully pushed in 2005 for the ouster of two top executives at Deutsche Börse, which runs the Frankfurt stock market.
Shares in ABN AMRO, which has its roots in a trading company set up by King Willem I in 1824, have barely budged since Groenink took over in May 2000. Neil Moorhouse, a spokesman at ABN, and a spokesman at Barclays declined to comment on an approach.
ABN AMRO has been considered as a takeover target by global rivals for years but has balked at the hurdle of agreeing on where a combined bank would be based.
Shares of ABN AMRO rose last September on speculation that it might be a takeover target for Bank of America. Barclays and ABN sounded out the possibility of a combination two years ago but talks did not yield results.
Groenink has made it clear in the past that he was unwilling to give up Amsterdam as headquarters of any merged lender. Yet, in an interview with Bloomberg News in July, he said that he would not have a serious argument to reject a takeover approach with a "very good story" and an offer worth 40 percent above the share price.
Any potential bidder for ABN AMRO may be attracted by its operations in the Americas, including LaSalle Bank in Chicago, which generate the largest slice of profit, and emerging markets. It has a 56 percent stake in the South African bank Absa and also owns banks in Spain, Portugal and the Middle East.
ABN AMRO bought Banca Antonveneta, an Italian bank, last year but had trouble keeping a cap on expenses from the acquisition. Groenink sold assets worth more than $3 billion since the beginning of last year, including Bouwfonds property-management units. ABN has more than 20 million individual customers and manages €975 billion, or $1.3 trillion, in assets in 58 countries.
Barclays invested heavily in its investment banking unit, Barclays Capital. That paid off when earnings from the business helped the bank to offset an increase in loan losses last year.
Barclays said Feb. 20 that second-half profit rose 41 percent to £2.26 billion. But its lending divisions were hurt by rising bad debts. Second-half charges to cover loan losses jumped 27 percent to £1.1 billion.
John Varley, chief executive of Barclays, said he wanted to expand through internal growth but has not excluded acquisitions. He hired Frits Seegers from Citigroup last year to help lead an expansion of the bank's consumer and commercial banking. ¶ 2:42 AM
Published: March 18, 2007
LONDON: Barclays, the British bank, has made an informal takeover approach for the Dutch bank ABN AMRO after its lagging share price was the subject of criticism last month from hedge funds, people with knowledge of the move said Sunday.
A takeover would be the largest ever cross-border merger in the banking industry and create a lender with businesses in America and Africa with a combined market value of more than £80 billion, or $155 billion. It would help Barclays compete with the only two larger British banks, HSBC Holding and Royal Bank of Scotland Group.
The contact between Barclays and ABN AMRO is preliminary, and there is no certainty that Barclays will make an offer, two people with knowledge of the approach said, declining to be identified citing confidentiality agreements.
ABN AMRO, based in Amsterdam, came under pressure from shareholders this year for failing to revive its share price, which lagged behind those of other banks for years.
The Children's Investment Fund, known as TCI, and Tosca, two funds that hold shares in ABN AMRO, called on Rijkman Groenink, the bank chief executive, last month to explore the options to sell, merge or spin off some of the assets, which they claim do not yield their full potential.
TCI, which owns about 1 percent of ABN AMRO, the biggest Dutch bank, is known for exerting pressure on management. The British fund successfully pushed in 2005 for the ouster of two top executives at Deutsche Börse, which runs the Frankfurt stock market.
Shares in ABN AMRO, which has its roots in a trading company set up by King Willem I in 1824, have barely budged since Groenink took over in May 2000. Neil Moorhouse, a spokesman at ABN, and a spokesman at Barclays declined to comment on an approach.
ABN AMRO has been considered as a takeover target by global rivals for years but has balked at the hurdle of agreeing on where a combined bank would be based.
Shares of ABN AMRO rose last September on speculation that it might be a takeover target for Bank of America. Barclays and ABN sounded out the possibility of a combination two years ago but talks did not yield results.
Groenink has made it clear in the past that he was unwilling to give up Amsterdam as headquarters of any merged lender. Yet, in an interview with Bloomberg News in July, he said that he would not have a serious argument to reject a takeover approach with a "very good story" and an offer worth 40 percent above the share price.
Any potential bidder for ABN AMRO may be attracted by its operations in the Americas, including LaSalle Bank in Chicago, which generate the largest slice of profit, and emerging markets. It has a 56 percent stake in the South African bank Absa and also owns banks in Spain, Portugal and the Middle East.
ABN AMRO bought Banca Antonveneta, an Italian bank, last year but had trouble keeping a cap on expenses from the acquisition. Groenink sold assets worth more than $3 billion since the beginning of last year, including Bouwfonds property-management units. ABN has more than 20 million individual customers and manages €975 billion, or $1.3 trillion, in assets in 58 countries.
Barclays invested heavily in its investment banking unit, Barclays Capital. That paid off when earnings from the business helped the bank to offset an increase in loan losses last year.
Barclays said Feb. 20 that second-half profit rose 41 percent to £2.26 billion. But its lending divisions were hurt by rising bad debts. Second-half charges to cover loan losses jumped 27 percent to £1.1 billion.
John Varley, chief executive of Barclays, said he wanted to expand through internal growth but has not excluded acquisitions. He hired Frits Seegers from Citigroup last year to help lead an expansion of the bank's consumer and commercial banking. ¶ 2:42 AM
