RBS trio to seal ABN win, big integration task now
A Royal Bank of Scotland-led consortium is set to claim victory in the takeover battle for ABN AMRO on Monday, shifting investor and market attention to the unprecedented integration challenge ahead.
RBS and its partners Santander of Spain and Belgian-Dutch Fortis will aim to move quickly to end 7 months of disruption at ABN and ease concern they have overpaid for the Dutch bank after this summer's credit crunch.
All three banks have a good track record for integrating acquisitions, but ABN will be the world's biggest bank takeover and poses complex cross-border and regulatory issues. Many see it as a test case for whether major group takeovers can work.
The RBS-led group is almost certain to win support from the majority of ABN's shareholders it needs for its almost 72 billion euro ($101.6 billion) takeover offer.
Rival bidder Barclays conceded defeat on Friday and UK press reports over the weekend said over 85 percent of ABN's shares had been tendered to the consortium by the time its offer closed on Friday. The banks have declined to comment.
The consortium will be keen to get at least 80 percent support for its offer, which would ease the process of buying out all the shareholders.
The count of the votes continued over the weekend, and a tally is expected to be announced as early as Monday.
The consortium has until the end of this week to declare the bid unconditional, which in addition to ABN shareholder approval requires some other technical issues such as the closing of a 13 billion euro rights issue by Fortis.
The breakup of ABN will involve 4,500 branches across 53 countries and unraveling businesses ranging from cash management operations in Asia to retail banking in Brazil.
RBS missed out on getting ABN's prized U.S. bank LaSalle but will take its wholesale and investment banking business and its Asian operations.
Santander gets ABN's Italian and Brazilian units, while Fortis will get its Dutch business, as well as its wealth and asset management operations.
Each consortium member says it has delivered synergies from big deals in the past and can make ABN work for them. RBS alone expects to deliver cost savings of around 1.3 billion euros.
But a sharp deterioration in capital markets in August and September has raised concern the trio will struggle to achieve the revenue benefits they have projected, even if they should achieve cost synergies.
Barclays CEO John Varley said on Friday he believed the consortium had overpaid as ABN's intrinsic value had been affected by the market turmoil.
Barclays itself enters its first week since March without attention dominated by its pursuit of ABN. Some see it as takeover target, but analysts said the turbulent capital markets make it unlikely a rival would make such a big move so its executives are unlikely to come under immediate pressure.
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