DJ Barclays, ABN Amro Announce ?67B Merger Agreement
AMSTERDAM -- ABN Amro Holding NV (ABN) and Barclays PLC (BCS) said Monday that following several weeks of talks they have agreed to terms of a EUR67 billion.
Barclays said it will offer 3.225 new Barclays shares for each ABN Amro share held, valuing its bid at EUR36.25 a share. The combination is expected to generate annual synergies of EUR3.5 billion by 2010, the banks said in a joint statement.
The combined group will be based in Amsterdam and will be called Barclays PLC.
Despite the agreement, ABN Amro Chairman Rijkman Groenink said he still plans to meet Royal Bank of Scotland Group PLC (RBS.LN) representatives Monday to discuss the U.K. banks possible consortium bid for the Dutch bank.
RBS has said it is interested in possibly bidding for ABN Amro alongside Fortis NV (FORSY) and Santander Central Hispano SA (STD). RBS wasnt immediately reachable for comment.
Groenink said he would study any alternative offers that emerged from the meeting.
But he also expressed enthusiasm for the Barclays all-share merger offer.
Barclays and ABN Amro said the merger is expected to be completed in the fourth quarter of 2007.
ABN Amro shareholder The Childrens Investment Fund Management LLP, or TCI, which holds 2% of the banks shares and had called for it to be broken up as a way of maximizing returns to shareholders, said Monday it was studying the merger agreement and "may have additional comments in due course."
A fund manager from Standard Life said Monday that the RBS-led consortium still has the edge over Barclays in spite of the agreed offer.
David Cumming told the BBC, "I still think that RBS, Santander and Fortis have the better chance." He said shareholders would be reluctant to back Barclays in a bidding war with the consortium and that Barclays was "stretching its credibility with shareholders on the valuation of synergies from the deal.
ABN Amro chairman Arthur Martinez will be the chairman of the new business, while Barclays Chief executive John Varley will be named CEO. Groenink will become non-executive director at Barclays.
With the merger announcement ABN Amro said it also agreed to sell its Chicago-based bank LaSalle to Bank of America Corp. (BAC) For $21 billion.
The completion of the LaSalle sale is a condition of the merger. The LaSalle sale is expected to completed in late 2007 but is still subject to regulatory approval and other customary closing conditions.
The combined new bank will distribute EUR12 billion to shareholders after LaSalle has been sold, the banks said.
The terms of the sale permit ABN Amro to accept a higher offer for LaSalle during a period of 14 calendar days from the date of the agreement. Bank of America also has an option to match a higher offer and provides for a termination fee of $200 million payable to the Bank of America if the agreement is terminated under certain circumstances, ABN Amro said.
The U.K.s FSA will be the lead supervisor of the combined group. It is expected that the combination of Barclays and ABN Amro will result in a net reduction in staff of about 12,800.
In addition, it is expected that 10,800 full-time equivalent positions will be moved offshore to low-cost locations.
According to ABN Amro this will have an impact on a total of approximately 23,600 full-time equivalent positions of the combined work force of approximately 217,000.
At 0746 GMT, Barclays shares were down 8 pence, or 1.3%, to 742 pence. ABN AMro shares were up EUR0.38, or 1.1%, to EUR36.67.