Barclays surrenders over takeover

Source: Exec Digital USA

Date :08/10/2007 09:03:57

Banking giant Barclays has conceded defeat in its bid to buy Dutch bank ABN Amro after a six-month battle.

The withdrawal clears the way for a takeover of ABN by a rival Royal Bank of Scotland-led consortium, which outgunned Barclays with a higher £49.1 billion offer.

Barclays said the costs of its bid had been covered by a 200 million euro (£138.5 million) break fee agreed with the Dutch bank.

Barclays said it had withdrawn the offer after failing to gain the required backing from 80% of the Dutch bank's shareholders. The RBS offer is closing for acceptances from ABN shareholders, with the formal outcome known early next week.

Despite the failure of the bid, Barclays chairman Marcus Agius said: "The board is proud of the way Barclays senior management conducted the campaign for ABN Amro."

Barclays' bid - which is mainly in shares - has fallen in value to around £43 billion as financial shares have been buffeted by the summer turmoil in global stock markets amid fears of exposure to losses on high-risk US mortgages.

But some commentators said the defeat could be a "blessing in disguise" for the bank and praised Barclays for refusing to be drawn into a bidding war.

BGC Partners senior strategist Howard Wheeldon said: "The Barclays board can, in our view, hold respective heads high and rightly claim they have been risk-averse."

Mr Wheeldon added that the RBS-led consortium, which plans to break up the Dutch bank, faced an "awkward test" amid concerns that it had overpaid for the deal. "Not only does the consortium face the difficult test of carving a banking icon up each of the three individual consortium members faces the awkward test of producing shareholder value," Mr Wheeldon added.

Barclays sweetened the failure by announcing a £1.55 billion share buyback programme for shareholders.

October 8 2007

Related Links

Barclays

ABN Amro

Royal Bank of Scotland