Left with very little choice, the two boards of ABN Amro on Monday threw open the fight for the Dutch bank, dropping its recommendation of a deal with Barclays and declining to give either bidder its backing.
Despite Barclays’ best efforts last week, its deals with China Development Bank and Singapore’s Temasek haven’t boosted the Barclays share price sufficiently to raise the value of its mostly-paper offer to within fighting distance of the RBS-led consortium’s pitch.
The Barclays offer, which is “consistent with ABN Amro’s previously articulated strategic vision”, the boards noted on Monday, and now offered further growth opportunities in the “attractive Asian market”, is worth around 9 per cent less than the consortium’s predominantly cash offer, and slightly below where ABN shares closed on Friday.
Cynics might wonder how much alignment of the Barclays offer with ABN’s “strategic vision” is actually worth. In the second quarter, net profit slipped 7.1 per cent year-on-year at the bank. And the sale process was kicked off back in February by shareholders, or at least one shareholder in the form of TCI, calling for a strategic overhaul involving the spinning off or sale of parts of its sprawling global businesses.
Of course, in opting to stay neutral, the boards needed to show good reason not to back the RBS group’s offer. Cue talk of “integration risks”, “unresolved questions”, and “more onerous and uncertain” clauses than in the competing offer.
Barclays in response waived the need for a recommendation as a pre-condition of its bid, and chief exec John Varley said in a statement that he recognised that “at the current time, it is difficult for the boards of ABN Amro to make a clear recommendation to their shareholders.”
In the current market though, Barclays is likely to struggle to find the support that would help it close the gap between the two offers. Shares in both the London-listed suitors of ABN slipped as trading commenced on Monday.