Royal Bank of Scotland Group PLC, Santander Central Hispano SA and Fortis offered 39 euros (US$53) a share to buy ABN Amro Holding NV, sparking the biggest takeover battle in the financial-services industry.
Shares of ABN Amro rallied 5.1 percent to 36.80 euros in Amsterdam after the Royal Bank-led group offered 70 percent in cash and 30 percent in its shares.
The banks are seeking to trump the bid that ABN Amro agreed to accept from Barclays PLC on Monday. In a related deal, ABN Amro agreed to sell Chicago-based LaSalle Bank to Bank of America Corp for US$21 billion.
Edinburgh-based Royal Bank, the second-biggest UK bank after HSBC Holdings PLC, and its partners will break up the 183 year-old ABN Amro if their bid beats the offer from Barclays, the UK's No. 3 bank. ABN Amro shares have surged 35 percent since last Thursday when it said it was in talks with Barclays, giving it a market value of 70 billion euros.
"It's a good counter-punch from RBS," said Sandy Chen, an analyst at Panmure Gordon in London who has a "buy" rating on Royal Bank.
"The offer of 70 percent cash looks good compared with the 100 percent shares offer of Barclays. It increases the risk of value dilution for Barclays shareholders should they wish to counter-bid," Chen said.
The banks said their offer depends on LaSalle Bank remaining within ABN Amro and on due diligence. ABN Amro has branches in 53 countries and owns Banca Antonveneta in Italy, Banco Real in Brazil and LaSalle in the US.
"The banks are of the clear view that their proposals are superior for ABN Amro's shareholders and are straightforward from a shareholder, regulatory and execution perspective," the Royal Bank-led group said today in a statement.
No ABN Amro spokesperson could immediately be reached for comment.
TCI Fund Management LLP, the London-based hedge fund that has asked shareholders to pressure ABN Amro's board at its annual meeting tomorrow to break up the bank, has urged ABN Amro's management to view an approach from Royal Bank as "friendly."
Royal Bank CEO Fred Goodwin has a history of winning fights, having nudged aside Edinburgh-based rival Bank of Scotland in 2000 for National Westminster Bank PLC. NatWest shareholders accepted Royal Bank's hostile ?23.6 billion (US$46.8 billion) offer after a five-month battle.
"With Royal Bank now involved, it's going into a longer timescale," said Julian Chillingworth, who helps manage US$21 billion at London-based Rathbone Brothers PLC and holds Barclays shares. "We don't expect it to be resolved soon."
ABN Amro CEO Rijkman Groenink said on Monday the three banks were "out for deconstruction" of the Dutch bank and delayed a meeting planned for that day with the group.
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