AMSTERDAM, 24 April 2007 — Barclays PLC said yesterday it will acquire ABN Amro NV for 67 billion euros ($91.16 billion) in the largest takeover in the financial services sector, aiming to create a global banking giant and pre-empt a rival bid to break up the Netherlands’ largest bank.
As part of the deal, ABN announced it is selling its US unit LaSalle Bank to Bank of America Corp. for $21 billion (15.45 billion euros) in cash.
The proposed chief executive of the new group, Barclays CEO John Varley, called the deal “the largest merger ever in global financial industry,” and said it holds out the promise of growth at a rate twice as fast as global gross domestic product.
Despite the agreement, ABN said it would welcome a meeting with representatives from Royal Bank of Scotland PLC, Spain’s Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV, which invited ABN to enter into talks earlier this month.
But the consortium called off the meeting at the last minute, and said it wanted to hear from ABN Amro by the end of the day under what conditions it would consider scuttling the planned sale of LaSalle.
The consortium intended to split up ABN and sell off parts of its operations to each, but the breakup held less interest with the divestiture of ABN Amro’s large US operations.
“They still have time to come with an alternative proposal,” said Ton Geitman of Petercam Financial Intelligence in Amsterdam. But unless they could block the sale of LaSalle, the three consortium partners would have to renegotiate among themselves how to split up the Dutch bank, he said.
“ABN Amro considers itself to have four home markets: Holland, the United States, Italy and Brazil. Barclay’s offer spinning off LaSalle to Bank of America makes some sense,” said Bart Narter, a senior analyst at Celent, a US-based international financial research and consulting firm. The consortium may see itself better positioned to handle the non-US markets, he said.
When completed, Barclay’s acquisition of ABN Amro would create one of the top five global banks by market capitalization.
Under the deal announced yesterday, Barclays offered 36.25 euros ($49.25) for each ABN share, slightly below Friday’s closing price. Varley said the deal was worth 67 billion euros, a 33 percent premium from ABN’s share price when talks began last month.
ABN Amro shares rose 1 percent to 36.66 euros ($49.88). Barclays shares fell 2 percent to 735 pence ($14.70).
“The proposed merger of ABN Amro and Barclays will create a strong and competitive combination for its clients with superior products and extensive distribution,” the banks said in a statement. “The merged group is expected to generate significant and sustained future incremental earnings growth for shareholders.”
For each share, ABN Amro shareholders will be offered 3.225 ordinary shares in the new group, to be called Barclays PLC. The companies said the deal would create a single bank with 47 million customers worldwide.
The new group will be based in Amsterdam — seen as a negotiating concession to the Dutch — and Varley said he would base himself in the Dutch capital. But the group said it would remain a British “tax resident.”
Dutch Finance Minister Wouter Bos, who must approve the deal, said the merger “would fit in the consolidation that is expected to take place within the European banking sector.”