A Dutch court ruled Thursday that ABN Amro must seek shareholder approval before it can proceed with the proposed $21 billion sale of its Chicago-based LaSalle Bank to Bank of America.
The ruling was a setback for ABN Amro’s management which was determined to accept a buyout offer by Barclays PLC after shedding its LaSalle unit, holding off a higher hostile takeover bid by a three-bank consortium.
The court said the sale of LaSalle was so interwoven with the Barclays takeover bid that it should have been put to the shareholders for a vote. ABN had said the deal was too small to demand shareholder approval.
ABN Amro, the Netherlands’ largest bank, revealed the sale of LaSalle to U.S.-based Bank of America Corp. simultaneously with the announcement that it intended to accept Barclays’ offer of 67 billion euros ($91.2 billion) to absorb the rest of the Dutch bank.
Shareholders complained that the sale was intended as a poison pill to forestall the higher bid from the consortium led by the Royal Bank of Scotland, which said it wanted to break up ABN Amro.
The RBS group indicated it was prepared to offer 39 euros per share for ABN on April 25, mostly in cash, or a total of 72.2 billion euros ($98.5 billion). That’s about 10 percent more than Barclay’s indicative all-share bid of around 36.25 euros, made April 23.
“This is a historic decision,” said Peter de Vries of the shareholders group VEB, which appealed to the court to halt the deal. “Their trick has failed. This is fantastic. I am absolutely delighted.”
Bank of America spokesman Scott Silvestri said the company was reviewing the judge’s decision and had no immediate comment.”
ABN management argued that the RBS consortium wants to carve up ABN’s businesses, a strategy likely to lead to mass layoffs and not in the best interest of long-term shareholders.
RBS partners Banco Santander Central Hispano SA of Spain wants ABN’s high-growth Brazilian operations, while Belgium’s Fortis NV wants the Dutch arm, which is the Netherlands’ largest retail bank.
Labor unions are already opposed to the Barclays’ deal, which will lead to 24,000 jobs lost or outsourced to low-wage countries, mostly in England. A deal with Fortis would lead to more losses in the Netherlands, and the Dutch government and national banks are watching the deal nervously.
But neither bid is official yet, and the RBS consortium has until midnight May 6 to beat BofA’s bid for LaSalle, regardless of the ruling by the Enterprise Chamber of the Amsterdam Superior Court.
Other banks may also bid for LaSalle.
The suit was launched after a fractious ABN shareholders meeting last week, at which Dutch shareholders rights group VEB said the LaSalle deal should have been submitted to shareholders for approval.
But at an emergency court session held Saturday, ABN lawyer Paul Olden argued that wasn’t necessary: Dutch law stipulates that only the sale of businesses representing more than a third of a company’s operations require shareholder approval.
But VEB lawyer Jurgen Lemstra responded the sale violates both the spirit of the law, and the letter: Dutch law also stipulates that any “fundamental change” to a company’s nature should be approved by shareholders, and the LaSalle sale was directly linked to a takeover.
Sanford Bernstein analysts said Thursday they doubted Barclays would win the fight for ABN without LaSalle.
“We remain unconvinced that Barclays is the highest value owner of ABN,” Antony Broadbent said in a note to investors. “Other bidders, including the RBS- Santander-Fortis consortium, are likely to be able to deliver better value for both ABN’s and their own shareholders.”
Meanwhile, BofA has hinted it is also willing to fight to hold on to its prey.
“Bank of America has a legal contract to acquire ABN Amro North America Holding Co. (LaSalle) and expects that contract to be fulfilled under its current terms,” the company said last week in a written statement.