updated 4/27/2007 11:08:40 AM ET 2007-04-27T15:08:40

ABN Amro’s management faced attacks on two fronts Friday, as a Royal Bank of Scotland-led takeover attempt turned hostile and a shareholders’ rights group sued to block a board-approved acquisition by Barclays.

The dual developments heightened the crisis atmosphere around the Dutch bank, now at the center of the largest takeover struggle in the history of the financial industry, with as much as $100 billion at stake.

RBS, together with its allies, Spain’s Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV, said in a statement Friday they had “notified the supervisory and managing boards of ABN Amro yesterday evening of their intention to make a public offer for 100 percent of” ABN shares.

They said they had been pushed to bypass ABN’s boards due to “the terms of the contract ABN Amro has signed with Bank of America” — referring to a side deal ABN Amro unveiled Monday to sell its U.S. arm, LaSalle Bank Corp., to BofA for $21 billion as part of its agreement with Barclays.

That move was widely seen as a poison pill measure to frustrate the RBS consortium, which also wants LaSalle, and it drew enraged reactions from shareholders at ABN’s chaotic annual shareholders meeting Thursday. Analysts believe Barclays’ all-share bid will be worth at least 10 percent less than RBS’s proposed cash-and-share bid of 39 euros per share, which values ABN at 72.2 billion euros ($98.1 billion).

Barclays shares closed at 718.5 pence ($14.38) Thursday, suggesting an offer price of 34.02 euros for ABN. ABN’s shares traded at 36.60 euros ($49.92) Friday, between the two offers — suggesting investors have serious doubts as to which will prevail and at what price.

“As far as we’re concerned (the LaSalle sale) is a trick to prevent ABN from being taken over by a party other than Barclays,” said Peter de Vries, the head of the Dutch shareholder rights organization VEB Thursday.

De Vries’s organization filed an injunction “to freeze the sale of LaSalle, because that’s a decision that should be presented to shareholders.”

The Enterprise Chamber of the Amsterdam Superior Court said in a statement Friday it would hear the case first thing Saturday morning. ABN Amro’s deal with Bank of America is to close May 7 unless the court blocks it or ABN receives a higher bid.

Shareholders have already in essence sided with the VEB by means of a vote at their meeting, approving a motion declaring that ABN Amro’s management should agree in principle to split or sell the company.

Management had opposed that motion, saying the Barclays deal made it irrelevant.

After the meeting, Chief Executive Rijkman Groenink said “we will take into account what our shareholders recommend to us, and just make sure we have a strategy, a policy, that takes their interests into consideration.”

ABN’s stock has risen by more than 33 percent since the splitting proposal was made by British hedge fund TCI in February. TCI currently holds nearly 3 percent of the shares.

Groenink said Bank of America’s offer was too good to pass up, but “we are receptive to any compelling offer.”

“I hope another bidder (for LaSalle) comes forward,” he said. “If that’s RBS, who have expressed interest, I’m not stopping them. Let them put their offer on the table.”

However, he said that a merger with Barclays that keeps ABN mostly intact is preferable to the carve-up proposed by the RBS consortium, arguing that splitting ABN would harm the long-term interests of the bank, its shareholders, and employees.

“Price isn’t the only thing that counts,” he said, his voice choking. “As human beings and responsible citizens ... we have the obligation to look farther than the last dime.”

While RBS wants LaSalle, Santander wants ABN’s Italian and Brazilian arms, while Fortis would take the Dutch operations.

“The banks continue to believe that their proposals offer materially (more) value for ABN Amro’s shareholders and benefits to customers and employees, compared with the recommended offer from Barclays,” their statement Friday said.

If another bank buys LaSalle, Bank of America will be entitled to match it or pay a $200 million breakup fee.

ABN Amro announced another liability on Thursday: It took a 365 million euros ($498 million) provision to cover potential fines arising from an ongoing criminal investigation by the U.S. Department of Justice into its handling of cash transfers and “other Bank Secrecy Act compliance matters.”

Discussions with the DOJ “recently have advanced to the point where it is appropriate to take” the provision, ABN said. A fine of that size would be among the largest issued by the Justice Department.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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