Barclays Plc abandoned a six-month battle to buy ABN Amro Holding NV after investors failed to back its bid, clearing the way for Royal Bank of Scotland Group Plc and two partners to complete the biggest banking takeover.
Investors tendered about 4.4 million shares to Barclays's 62.8 billion euro (US$89 billion) offer, the London-based bank said in a statement today, amounting to about 0.2 percent of ABN Amro's stock. Barclays was competing against a 71.8 billion euro offer from Royal Bank, Banco Santander SA and Fortis.
The loss of ABN Amro, the biggest Dutch bank, sets back chief executive officer John Varley's plan to speed earnings growth and lessen dependence on securities trading. It also removes the risk of executing a merger of historic proportions after rising defaults on US mortgages rattled credit markets and ravaged earnings at Citigroup Inc and UBS AG.
"Barclays is admitting defeat, but they are not damaged," said Mamoun Tazi, an analyst at MF Global Securities Ltd in London who has a "neutral" rating on the stock.
Barclays' shares were little changed at 654.5 pence by 12:56pm in London. The bank said it will buy back as much as ?1.55 billion (US$3.16 billion) of its own stock for cancelation by year's end.
"We have noted Barclays's announcement and we fully understand their position," Neil Moorhouse, an Amsterdam-based spokesman for ABN Amro, said in a telephone interview. Royal Bank spokeswoman Carolyn McAdam declined to comment.
By acknowledging defeat, Varley, 51, ends a bid to create the sixth-biggest bank in the world. ABN Amro would have doubled Barclays' consumer banking revenue and given the company new operations in markets from Brazil to India.
"Barclays has strong momentum and I am confident that we will continue to deliver significant growth," Varley said.
Barclays' prospects had got a boost on July 13 when a Dutch court decided to allow ABN Amro's planned sale of LaSalle Bank in Chicago to Bank of America Corp for US$21 billion in cash. Royal Bank CEO Fred Goodwin, 49, had been seeking to buy LaSalle to expand his own operations in the US.
Barclays said the 200 million euro breakup fee it expects to receive from ABN Amro will "significantly exceed the costs that Barclays incurred in connection with the offer."
Royal Bank, Santander of Spain and Fortis, based in Brussels and Utrecht, the Netherlands, plan to carve up ABN Amro.
Royal Bank will take the investment-banking and Asian consumer businesses, while Santander, Spain's biggest bank, will expand into Italy and double its market share in Brazil. Fortis, the largest Belgian financial-services company, wants the Dutch consumer-banking arm and ABN Amro's asset-management and private banking units.
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