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RBS unveils formal $95b bid for ABN

LONDON — The Royal Bank of Scotland led a European consortium in a titanic attack against British rival Barclays yesterday with a record-breaking bid for Dutch target ABN Amro worth almost $100 billion.

The formal consortium offer, worth 71.14 billion euros ($95.64 billion) and is mostly in cash, has outgunned Barclays’ agreed all-shares bid of 67 billion euros. However, ABN Amro has yet to respond to the RBS offer.

The consortium, comprising also Banco Santander of Spain and Belgian-Dutch group Fortis, wants to break up ABN Amro. But Barclays is bidding to create a vast global group and the second-biggest bank in Europe after HSBC.

The RBS-led grouping forecast cost savings of 4.23 billion euros by the end of 2010, and additional profit of 1.22 billion euros over the same period.

"Cost synergies are, as expected, materially higher than Barclays have offered, which drives the higher bid price," Collins Stewart analyst Alex Potter wrote in a note to clients.

"This deal offers better value for ABN shareholders and we anticipate the consortium winning control."

The takeover battle shows how European banks are chasing rapid expansion in Europe, the United States, Asia and emerging markets.

"ABN Amro, the banks believe, contains good businesses and customer franchises widely spread across a range of attractive markets," said a joint statement from the consortium issued in Britain and The Netherlands.

"However, ABN AMRO has acknowledged the opportunity for it to deliver benefits for its customers and employees and generate growth and additional value for its shareholders by combining with a partner and selling parts of the ABN Amro group."

The consortium’s takeover would "create stronger businesses with enhanced market presence and growth prospects, leading to substantial value creation and benefits for shareholders, customers and employees," the statement added.

Whichever bid succeeds, the deal would be the world’s biggest ever bank takeover in financial terms, beating the previous record banking merger when US group Travelers bought Citigroup for $72.56 million in 1998. RBS will offer 27.2 b euros , Fortis $24b and Santander $19.9b for ABN Amro.