A trio of banks led by Royal Bank of Scotland PLC said Monday it would rebid $97.8 billion for ABN Amro Holding NV, as the group went on the offensive in the largest takeover battle in the history of the financial industry.
The proposed bid of $52.87 per share, mostly in cash, would be worth at least 10 percent more than an all-share rival bid by Barclays PLC, RBS and its partners said.
Analysts from Bear Stearns said the new offer may end Barclays' chances of winning ABN.
"Barclays can't raise its offer to get near the consortium's level, can't match the cash component," and the consortium could raise the bid again if it needed, they said in a research note.
"Barclays should walk away," they said, adding that at this point Barclays' share price would probably benefit from losing the fight.
The RBS group offer is almost unchanged from an earlier proposed bid, even though ABN Amro last week won permission from the Dutch Supreme Court to sell Chicago-based LaSalle Bank Corp. to Bank of America Corp. for $21 billion. That sale was widely seen as a poison pill for RBS, which also wanted LaSalle, and advantageous to a merger with Barclays, which had the support of ABN Amro's management.
The RBS group made its first bid dependent on LaSalle remaining with ABN, but dropped that condition now that the LaSalle sale to BofA is certain.
"The banks will remove preconditions and conditions relating directly to the LaSalle situation," RBS, Fortis NV of Belgium and Banco Santander Central Hispano SA said in a statement.
"The acquisition of the ABN Amro businesses remains compelling from a financial point of view, as evidenced by the fact that it produces essentially the same earnings enhancement for the group, despite the smaller size of the transaction," said RBS Chief Executive Fred Goodwin.
Even without LaSalle, RBS is interested in ABN Amro's investment banking operations and the rest of its global operations unclaimed by Fortis or Santander.
Fortis wants ABN's Dutch arm, while Santander wants its Italian and Brazilian operations.
The three said they "have received assurances from ABN Amro that their proposed offer will be dealt with on a level playing field" — in other words, that ABN will no longer attempt to prefer the Barclays bid.
Barclays CEO John Varley responded that the consortium's offer will "still face considerable regulatory and shareholder hurdles."
Both Barclays and the consortium have been working closely with Dutch regulators and claim to have made good progress toward approval.
"Our offer would produce better long-term value for ABN Amro shareholders because the resulting combination will deliver excellent growth and ABN Amro shareholders will participate from the upside of that growth," Varley said in a statement.
However, Barclays has already heard complaints from its own shareholders who are afraid the bank will overpay for ABN. Varley hinted Monday he doesn't have much room to take the bidding higher.
"We will only proceed with this transaction on terms which produce the right results for shareholders," he said. "We have high benchmarks for return and we will not compromise them."
The new offer from the RBS group includes $49.09 cash plus 0.296 new RBS shares — slightly more cash than last time.
The consortium and Barclays have until July 23 to make their formal offers. Then either could theoretically raise their bid or respond to a raise from a third party.
Analysts from Rabo Securities said Barclays may try to raise, but that the British bank is "not a serious alternative" to the RBS group anymore.