Tuesday, August 7, 2007

Tying up loose ends - Fortis gains investor approval for ABN bid, rights issue approval to follow; Barclays wins EU anti-trust approval

Fortis Shareholders Back Proposal for ABN Amro Bid (Update2)
By Martijn van der Starre and John Martens


Aug. 6 (Bloomberg) -- Fortis, Belgium's largest financial- services company, moved a step closer to buying part of ABN Amro Holding NV after shareholders backed a plan to raise as much as 13 billion euros ($17.9 billion) to pay for the deal.

Investors at a meeting in Brussels approved the 72 billion- euro joint bid by Fortis and two other banks for Amsterdam-based ABN Amro, Fortis said today. More than 93 percent endorsed a rights offer to finance the transaction, which also needs the backing of a meeting in Utrecht this afternoon.

The agreement paves the way for Fortis, Royal Bank of Scotland Group Plc and Banco Santander SA, whose offer is mostly in cash, to trump a competing 65.3 billion-euro share and cash offer from Barclays Plc, said Alan Beaney, who helps manage $2 billion at Principal Investment Management.

``The Royal Bank consortium will win now with their higher offer,'' said Sevenoaks, England-based Beaney, whose holdings include shares of Barclays and Royal Bank. ``Ironically, Barclays's share price and their offer will rise because investors think they are less likely to do the deal.''

Barclays stock rose 0.8 percent to 684.5 pence as of 2:30 p.m. in London. Shares of Fortis fell 1.6 percent to 28 euros in Brussels, valuing the company at 36.5 billion euros.

Fortis plans to pay 24 billion euros for the Dutch retail and commercial banks, as well as the asset-management and private-banking units. It's bidding for 40 percent of ABN Amro, the largest part after ABN Amro sells its Chicago-based LaSalle unit to Bank of America Corp.

`Major Step Forward'
Fortis would increase the number of branches in the Netherlands to 720 from 159 and add more than 4 million retail customers with the purchase. The combined private banking and asset-management units would manage about 500 billion euros in assets, Fortis, based in Utrecht and Brussels, said.

The purchase would be ``a major step forward for our company and we'll be able to speed up our development on an international level,'' Fortis Chief Executive Officer Jean-Paul Votron told shareholders before the vote. It will lead to ``diversification and a better balance in our portfolio,'' Votron said.

ABN Amro withdrew its recommendation of the Barclays bid on July 30, saying it's financially inferior to the proposal by the Royal Bank group. The original agreement with Barclays, announced April 23, won European Union antitrust approval today.

``We continue to believe that Barclays's offer will ultimately deliver more value to ABN Amro shareholders with a low degree of risk and a high certainty of completion,'' Barclays CEO John Varley said today in comments passed on by spokesman Alistair Smith. The formal offer to shareholders, ``is another tangible step towards the merger with ABN Amro,'' Varley said.

`Blow Through Numbers'
Barclays made its formal offer to shareholders today and will hold a meeting with its shareholders to approve the offer Sept. 14. London-based Barclays bid 2.13 ordinary shares and 13.15 euros a share for each ordinary share of ABN Amro.

``The bid of the others is basically maximized,'' Barclays board member and head of consumer banking Frits Seegers said in an interview in Mumbai on Aug. 4. ``Our bid with the rise in share price will blow through these numbers.''

Edinburgh-based Royal Bank is to hold a meeting with its shareholders Aug. 10. ABN Amro shareholders will consider both bids Sept. 20. ABN Amro spokesman Jochem van de Laarschot declined to comment today. Spokespeople for Royal Bank and Barclays also declined to comment.

The acquisition of ABN Amro would be the largest financial- services takeover, exceeding the $69.9 billion combination of Citicorp and Travelers Group Inc. in 1998. Under the plan, Royal Bank would take the Dutch bank's investment banking and Asian consumer units and Banco Santander, Spain's largest bank, would take its Italian and Brazilian unit.

Fortis Share Slump
Fortis also sold 2 billion euros of notes last month that would automatically convert to securities tradable for stock, contingent on Fortis shareholders approving the rights issue. The company agreed to sell its stake in a Spanish insurance venture for 980 million euros.

Fortis shares fell 18 percent through yesterday from April 13, the day ABN Amro said it received a letter from the Royal Bank-led group asking for ``exploratory talks.'' ABN Amro's stock rose 5 percent, valuing the company at 67.3 billion euros.

After today's meeting at the Centre for Fine Arts in Brussels, shareholders discussed the vote and sipped on drinks from strawberry juice to Absolut Vodka and Duval-Leroy champagne.

Stichting VSBfonds, which owns about 4.99 percent of Fortis, voted in favor of the plans, said Luuk van Term, a Utrecht-based spokesman for the non-profit organization.

The takeover is ``very good for growth and employment,'' said Gunther Van Sant, a Belgian who owns Fortis shares and voted in favour of the resolutions. ``If this doesn't take place Fortis may end up being a prey itself.''

``I voted in favor of the bid to support the Fortis management,'' said Roger Smets, who manages about 1.2 million euros at the non-profit Belgian Society for Cremation. Smets said he has ``rock-solid'' confidence in management's plans.

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