Rbs Takeover of Abn Amro
Ultimate Law Guide Case study: Royal Bank of Scotland Consortium Takeover of ABN Amro
Interesting aspects to discuss at interview
Background to the RBS Consortium acquisition of ABN Amro
In April 2007, the European Commission ordered Dutch regulators to allow the takeover of ABN Amro (ABN). Soon after, ABN received a €66bn takeover bid from Barclays Bank. Two days later a consortium (the RBS Consortium), led by Royal Bank of Scotland (RBS) and including Fortis Bank and Banco Santander, made an even bigger offer of €72bn, €50bn of which would be cash and the remainder of which would be made up of shares in RBS.
Significance of the deal
The takeover is unrivalled in terms of size and complexity and is hugely significant as it is the world’s biggest banking transaction to date and the first cross-border takeover of a European bank. For example, the €13.4bn rights issue that Fortis needed to fund its contribution of the €70bn was the biggest ever in Europe. No European bank had ever succumbed to a cross-border hostile bid and it is interesting that the acquisition was for a perfectly solvent conglomerate. It is commonplace for acquisitions like that of ABN to happen in circumstances where there is a disparity between two organisations or where one organisation is in financial crises. An example of this is the Virgin Group’s proposed acquisition of Northern Rock following the effect of the credit crunch, where share prices tumbled to an all-time low.
In the case of ABN, you have a bank with a significant presence in the European banking market and its performance certainly did not suggest that it was in any financial difficulties. Although takeovers are often triggered by the weakness of the target, ABN is a huge organisation with offices in 53 countries and its reputation was never that of a desperate operation. To give you an idea of the size of ABN Amro’s operation, here are a few facts provided by fsteurope.com:
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Founded in 1824
Interesting aspects to discuss at interview
Background to the RBS Consortium acquisition of ABN Amro
In April 2007, the European Commission ordered Dutch regulators to allow the takeover of ABN Amro (ABN). Soon after, ABN received a €66bn takeover bid from Barclays Bank. Two days later a consortium (the RBS Consortium), led by Royal Bank of Scotland (RBS) and including Fortis Bank and Banco Santander, made an even bigger offer of €72bn, €50bn of which would be cash and the remainder of which would be made up of shares in RBS.
Significance of the deal
The takeover is unrivalled in terms of size and complexity and is hugely significant as it is the world’s biggest banking transaction to date and the first cross-border takeover of a European bank. For example, the €13.4bn rights issue that Fortis needed to fund its contribution of the €70bn was the biggest ever in Europe. No European bank had ever succumbed to a cross-border hostile bid and it is interesting that the acquisition was for a perfectly solvent conglomerate. It is commonplace for acquisitions like that of ABN to happen in circumstances where there is a disparity between two organisations or where one organisation is in financial crises. An example of this is the Virgin Group’s proposed acquisition of Northern Rock following the effect of the credit crunch, where share prices tumbled to an all-time low.
In the case of ABN, you have a bank with a significant presence in the European banking market and its performance certainly did not suggest that it was in any financial difficulties. Although takeovers are often triggered by the weakness of the target, ABN is a huge organisation with offices in 53 countries and its reputation was never that of a desperate operation. To give you an idea of the size of ABN Amro’s operation, here are a few facts provided by fsteurope.com:
1
• • • • •
Founded in 1824
References: Mahar, J & Polson, K, ‘The battle for Natwest’, , 26 November 2003, Stewart, D, ‘RBS seal the ABN Amro deal’, Banking Times, 8 October 2007, online at . ‘Sharpening the knives’, The Economist, 26 April 2007. ‘European Merger Policy – merger policy’, online at . ‘Triple play’, The Economist, 11 October 2007.. Larsen, TL, ‘RBS Consortium to take control of ABN with board nominations’, Financial Times. Knee, J, The Accidental Investment Banker: Inside the Decade that Transformed Wall Street (Oxford: Oxford University Press,). 9