Bank withdraws support for takeover by Barclays

Jul 31 2007 by Tony McDonough, Liverpool Daily Post

DUTCH bank ABN Amro yesterday withdrew its support for a takeover by UK rival Barclays.

Barclays, which is fighting to land ABN against a consortium led by the Royal Bank of Scotland, last week unveiled the terms of a higher £45.4bn offer.

But its bid is still less than the RBS-led team’s £48.2bn approach. ABN, which recommended an earlier offer from Barclays, said it could not recommend either offer to shareholders.

However ABN’s board said Barclays’ bid was “consistent” with the Dutch bank’s strategy, while it had “significant unresolved questions” over the consortium’s plans to break up the group, which is based in Amsterdam.

Barclays chief executive John Varley said he was pleased to have the continued support of ABN, but recognised it was currently “difficult” for the bank to make a clear recommendation to shareholders.

Barclays’ offer is almost two-thirds shares, but the stock fell 7% last week in a turbulent market.

The RBS-led consortium’s offer is 93% cash.

Barclays has said that if the takeover were successful it would slash more than 20,000 jobs from the combined group’s global operations.

The company employs more than 800 people in Liverpool through its Barclaycard division. However, it is believed most of the losses would come on the ABN side.

Barclays has enlisted the support of the Chinese and Singaporean governments as major shareholders to give it extra firepower in its battle for ABN with the RBS consortium.

Despite the lower value of its proposals, the bank maintains that its new offer will provide “superior long-term value” for shareholders.

Barclays will become the world’s fifth-largest bank if the deal goes ahead.

ABN added that Barclays’ strategic partnership with the state-controlled China Development Bank could increase the potential of a combined group in an attractive Asian market.

The Dutch bank said it would engage with both bidders to ensure a level playing field, but added that the consortium’s bid was uncertain to gain approval from financial regulators, whereas Barclays was “well on track” to gaining clearance.

tonymcdonough