The Dutch Supreme Court burst the logjam in the takeover battle for ABN Amro, the biggest in the history of the banking industry, with a ruling Friday that allowed the bank to sell its U.S. arm and cleared the way for ABN itself to be acquired.
The legal struggle over Chicago-based LaSalle Bank Corp. had kept the larger fight for ABN Amro on hold since early May.
In its ruling, the nation’s highest court decided that ABN’s management was entitled to sell LaSalle to Bank of America Corp. without consulting shareholders. The sale was widely seen as a “poison pill” measure to avoid a hostile takeover that would be lucrative for shareholders but would tear ABN apart.
The court overturned a lower court ruling and sided with management against a shareholders’ rights group that hoped to block the sale.
“The fact that the shareholders aim at selling their shares at the highest possible price involves no obligation for the board of directors of ABN Amro to obtain (their) approval of the sale of LaSalle,” said the court’s ruling, read by presiding judge Hans Fleers.
Bank of America, the second largest bank in the United States by assets, wants LaSalle to boost its presence in the Midwest.
Equally important, the ruling clears away legal uncertainties and any bidder wishing to purchase ABN Amro’s remaining operations — plus the $21 billion in cash it is getting for LaSalle — can step forward.
British bank Barclays PLC has the inside track. It already has agreed with ABN’s management to buy the bank in an all-share deal worth 63.7 billion euros ($87.6 billion).
But a rival consortium led by Royal Bank of Scotland PLC, which had hoped to acquire LaSalle as well, said Friday it will bid before a July 23 deadline.
“This (new) offer will be on materially superior terms to Barclays’ proposed offer,” the consortium said in a statement.
The RBS consortium had originally planned to bid 70 billion euros ($95.6 billion) for ABN, but that was dependent on LaSalle remaining within ABN. The consortium did not put a figure on its new bid — but it presumably will be slightly lower.
Some analysts now foresee a bidding war, and none rule out the chance that a third party could come forward.
ABN shares rose 1.5 percent to close at 35.85 euros ($49.30) Friday, higher than Barclays’ 34.38 euros ($47.28) per share offer — suggesting investors believe the bidding will go higher.
“The most likely scenario is that Barclays will launch an offer on its current terms first, then followed by an offer by the consortium ... Barclays could then potentially upgrade its offer,” analysts from Keefe, Bruyette and Woods said in a research note after the ruling.
Bank of America spokesman Frans van der Grint proclaimed a “complete victory” after the ruling, but Barclays and ABN Amro were more cautious.
“Now there’s an equal playing field for both parties to prepare a bid (for ABN) without LaSalle,” ABN Amro Chief Executive Rijkman Groenink told Dutch television broadcaster RTL.
Barclays said only that it was “pleased to see the Supreme Court has made a very clear ruling.”
RBS and its partners Fortis NV of Belgium and Banco Santander Central Hispano SA of Spain said they would study the ruling before responding.
Peter Paul de Vries, director of the Dutch shareholder rights organization VEB, said he was disappointed with the court’s decision, which he said allowed ABN’s management to hurt its own shareholders.
Under Dutch law, managers must take the interest of all “stakeholders” — including employees, customers, creditors and society as a whole — into account when making decisions.
Still, shareholders do have power to approve or reject the ABN takeover.
ABN management “may have won this battle, but they will lose the war,” De Vries said, referring to executive support for Barclays deal.