ABN Amro can sell LaSalle, court rules

ABN Amro can sell LaSalle, court rules
By Peter Thal Larsen, Banking Editor
Copyright The Financial Times Limited 2007
Published: July 13 2007 10:16 | Last updated: July 13 2007 10:16


ABN Amro was on Friday given permission to sell its US subsidiary to Bank of America without shareholder approval, ending a 10-week legal tussle over the sale and setting the stage for a head-on bidding war for control of the Dutch bank.

In an eagerly awaited ruling, the Dutch Supreme Court dismissed a decision by the country’s Enterprise Chamber that ABN Amro could not be allowed to complete a sale of the business, called LaSalle, without a shareholder vote.

The ruling clears the way for ABN Amro to complete the LaSalle sale, and also allows Barclays, which had agreed an all-share takeover of the Dutch bank originally valued at €63bn, formally to launch its bid.

It is also a setback for the rival consortium, led by Royal Bank of Scotland, which had made a €71bn break-up bid for ABN Amro that was conditional on it being able to buy the whole business, including LaSalle.

However the consortium, which includes Santander of Spain and Fortis, the Belgo-Dutch group, is widely expected to press ahead with a revised offer for the rest of ABN Amro, setting the stage for a head-to-head bidding war with Barclays.

The Enterprise Chamber ruled in May that, while the sale of LaSalle did not require a shareholder vote under Dutch law, it could not be separated from ABN Amro’s broader discussions over a deal with Barclays.

However, the Supreme Court dismissed this ruling. ”The fact that the shareholders aim at selling their shares at the highest possible price involves no obligation for the board of directors of ABN Amro to obtain the shareholders’ approval of the sale of LaSalle, nor does such an obligation arise from the prevailing views of the law in The Netherlands,” it said in a summary of the ruling which was published on its website.

”There should not be any unnecessary uncertainty about the carrying out of [the LaSalle sale], into which the board of directors of ABN Amro was entitled to enter.”

The decision removes some of the uncertainty about the future of ABN Amro, which was at risk of increasing disruption due to continued legal wrangling.

If the Supreme Court had upheld the Enterprise Court’s decision, ABN Amro would have faced a multi-billion dollar claim for damages from Bank of America in a New York court.

The Supreme Court accelerated its usual timetable in order to limit the lingering uncertainty over ABN Amro’s future.

Both Barclays and the RBS consortium have until July 23 to publish their formal offers for ABN Amro, setting the stage for a showdown which could be decided by early September.

Barclays is widely expected to attempt to sweeten its all-share offer by replacing some equity with cash. It could also announce plans to sell some of ABN Amro’s businesses – or some of its own operations – to help fund the deal.

Meanwhile, the RBS consortium is expected to revise its offer so that it is substantially all in cash, thereby increasing its appeal to the arbitrage funds that account for a significant proportion of ABN Amro’s shareholder base.

Fortis, which has to raise about €24bn to fund its purchase of ABN Amro’s Dutch retail banking, private banking and asset management arms, this week issued an €2bn convertible bond and also sold its share of a Spanish insurance venture to La Caixa, the savings bank.

However, both Barclays and RBS are under pressure from large UK institutional investors not to get dragged into a bidding war.

In mid-morning Amsterdam trading, ABN shares were up 0.7 per cent at €35.57. In London, Barclays had climbed 0.8 per cent to 724½p and RBS had risen 0.7 per cent to 639p.