Fortis NV shareholders in Brussels approved by a large margin yesterday both the company's participation in a consortium bidding 70.6 billion euros (US$96.8 billion) for ABN Amro Holding NV and a major share issue needed to finance its part of the deal.
The Fortis vote greatly boosts the chances that the Royal Bank of Scotland PLC-led consortium will win the bidding for ABN, besting a rival offer by Barclays PLC worth approximately 63.7 billion euros. Either takeover would be the largest in the financial industry's history.
Barclays' bid was formally launched yesterday, when it also won EU regulatory approval, while ABN Amro said it would hold a shareholder meeting Sept. 20 to debate the merits of the two bids. The consortium has already launched its bid, contingent on Fortis shareholders' approval.
Of the 34.7 percent of Fortis shareholders voting in Brussels, 95.5 percent approved the takeover and 93.5 percent approved licensing the Belgian-Dutch bank to issue 13 billion euros in new shares order to help finance the deal.
As a result of Fortis' dual-headquarters structure, shareholders were to vote again on both questions later yesterday in Utrecht before the approval is final. Under the bank's charter, a minority of just 25 percent of shareholders can block a share issue.
"I want to thank you from my heart for your trust," chairman Maurice Lippens said after the poll. "You have spoken with a massive vote."
Fortis' prospective share of the deal was 24 billion euros, a huge purchase for a bank which itself was worth just 37.1 billion euros as of Friday.
If the consortium bid wins, Fortis would acquire the bulk of ABN Amro's Dutch operations, and its wealthy private clients and asset management businesses worldwide.
Fortis' board said that, mostly due to cost savings from combining the two companies' operations, the deal would add 4.3 percent to its earnings per share by 2010, though it will hurt earnings in the short run due to restructuring costs.
The prospect of the dilution -- and the risk that the deal could turn sour -- has already led to a 14 percent decline in Fortis' share price since the start of the year.
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