Barclays: ABN Amro Bid Withdrawal Poses Bigger Question

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Published at: www.banking-business-review.com

Barclays Throws In the Towel and the RBS-Consortium Will Divide ABN's Spoils

October 9, 2007

Analysis by: GLG Expert Contributor

The RBS Consortium won the hostile bid for ABN with 86% of ABN's shareholders voting in favor of the Consortium's bid valued at $101.5 billion, trumping Barclays $89 billion bid. Barclays threw in the towel after ABN's shareholders voted in favor of the Consortium's bid and Barclays will seek the $281 million breakup fee from ABN. Barclays plans to move forward with its share buy back program to raise a maximum of $2.17 billion in 2007, to speed up growth due to losing its bid for ABN. Barclays experienced a share price slump in August when its share price dropped by as much as 15%, which reduced the value of its offer and Barclays was hurt by fears a collapse of the U.S. mortgage market may cause losses at its investment banking arm, BarCap and Barclays eventually fell out of contention with the Consortium's bid. The rival bidding for ABN began after activist hedge fund TCI raised concerns over ABN's share value, which opened the door for the Consortium's takeover of ABN.