While the Barclays offer matches ABN Amros strategic vision, the board cant recommend it from a financial point of view, the Amsterdam-based company said on Monday. The 72 billion-euro ($98.3 billion) bid from Royal Bank, Fortis and Banco Santander SA is 9.8% higher than Barclayss offer.
The 183-year-old ABN Amro had backed Barclays since April, in part because the London-based bank plans to keep the Dutch lender intact, while the trio led by Royal Bank intends to carve it up. ABN Amro declined to recommend the Royal Bank-led bid, citing unresolved questions about the proposed break-up of the company, which has operations in 53 countries stretching from Brazil to India.
Its negative for Barclays, but the bottleneck for the consortium remains the same, said Gert-Jaap Kraan, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV.
The Dutch bank reported a 7.1% decline in second-quarter profit to 1.13 billion euros, after earnings a year earlier were boosted by the sale of a stake in a Hungarian bank. Profit matched analysts estimates. ABN Amro shares rose 20 cents, or 0.6%, to 35.10 euros, bringing gains this year to 44%. The stock is the best performer this year on the 65-member Bloomberg Europe Banks and Financial Services Index. Barclays and Royal Bank each slipped 0.6% in London.
Barclays chief executive officer John Varley, in a statement, said the bank recognises that it is difficult for the boards of ABN Amro to make a clear recommendation. He said Barclays remains confident its offer delivers the value, stakeholder benefits and certainty that will allow the boards to support a recommendation in due course.
Barclays sweetened its offer on July 23, adding a cash component amounting to 37% of the bid, after lining up as much as $13.5 billion of investments from China Development Bank and Singapores Temasek Holdings Pte. The bid from Royal Bank, Santander and Fortis, which is 93% cash, started last week and runs through October 5.