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Tue, Jul 31, 2007 - Page 10 News List

ABN withdraws backing for Barclays takeover bid

LESS PROFITABLE The Netherlands' biggest bank said yesterday that its Q2 net profits fell 7.1 percent from the same period last year, but that was better then forecast


Dutch bank ABN Amro said yesterday that it would recommend neither of two mammoth takeover offers and was withdrawing its backing for a bid from Barclays over a rival proposal by a three-bank consortium.

It said its board of directors and its supervisory board were "not currently in a position to recommend either offer for acceptance to ABN AMRO shareholders."

"The boards are therefore, notwithstanding their support of the strategic benefits of the combination with Barclays, not currently in a position to recommend from a financial point of view the Barclays offer for acceptance to ABN Amro shareholders," the bank said in a statement.

The bank had earlier recommended the Barclays offer over that of a European consortium led by Royal Bank of Scotland (RBS).

In London, Barclays chief executive John Varley said the bank understood the position taken by the ABN boards.

"We recognize that, at the current time, it is difficult for the boards of ABN AMRO to make a clear recommendation to their shareholders," he said.

"However, we are pleased to have their continuing support, and we are confident that our revised offer delivers the value, stakeholder benefits and certainty that will allow the boards to support a recommendation in due course," he said.

With investment pledges from powerful state-linked finance institutions in China and Singapore, Barclays last week sweetened its offer, including a cash component as part of a revised informal bid worth about 67.5 billion euros (US$93.3 billion).

But ABN Amro said the value of the Barclay's offer, which is mostly in shares, was still less than that of the consortium. The RBS consortium, which also comprises the Dutch-Belgian group Fortis and Banco Santander of Spain, has formally offered 71.1 billion euros.

The consortium two weeks ago ramped up the cash part of its mammoth bid to 93 percent in an attempt to beat Barclays.

But ABN Amro said it could not support the offer, fearing it could trigger a break-up of the Dutch bank. It also voiced concern that shareholders of RBS and Fortis might not approve the bid.

Either takeover would represent the world's largest acquisition in the banking sector.

ABN Amro also presented its second quarter results yesterday, reporting a 7.1 percent drop in its net profit to 1.13 billion euros.

Despite the slide, the results were better than forecasts. Last year the second quarter results were boosted by an exceptional gain of 208 million euros while in the second quarter this year, the bank faced a one-off loss of 4 million euros, which explained part of the drop.

Operational income was up 12.8 percent to 5.45 billion euros.

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