Barclays Bids $91 B for ABN Amro

Elena
23 Apr, 2007
New York City

Barclays offered 3.225 of its shares for each ABN Amro shares, valuing the Dutch bank at 36.25 euros a share including a previously-announced 0.60 euros final dividend. The offer is a 33% premium to the price on March 16. A lot of analysts expect a rival to outbid the offer. ABN Amro shares climbed 1.1% to 36.70 euros in morning trading. Shares in Barclays lost 1.4% in London.

[R]8:00AM Barclay’s agreed to acquire ABN Amro for $91.16 billion.[/R]
The U.K.’s Barclays PLC announced Monday that it agreed to acquire Dutch ABN Amro NV in a deal worth 67 billion euros, or $91.16 billion to create the world's fifth-largest bank and the second-biggest in Europe behind HSBC Holdings. Barclays is offering 3.225 of its shares for each ABN Amro shares, valuing the Dutch bank at 36.25 euros a share including a previously-announced 0.60 euros final dividend. The offer is a 33% premium to the price on March 16, the last day before the announcement that the two financial institutions were in deal talks. The world’s biggest bank takeover followed a month of serious negotiations.

According to terms of agreement, ABN Amro would sell its U.S. unit LaSalle, to Bank of America Corp. for $21 billion. Despite the agreement, ABN said it will go ahead with meetings with representatives from Royal Bank of Scotland PLC, Spain''s Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV. A lot of analysts expect a rival to outbid the offer. The group expects see $4.8 billion in annual cost savings by 2010. Approximately 12,800 jobs will be cut from the combined work force of 217,000. About 10,800 others are likely to migrate to cheaper offshore locations. ABN Amro shares climbed 1.1% to 36.70 euros in morning trading. Shares in Barclays lost 1.4% in London.


[R]6:30AM European shares advance Monday on ABN Amro M&A[/R]
European markets advanced on Monday. The German DAX Xetra 30 index rose 0.1% at 7,347.57, the U.K. FTSE 100 index rose 0.1% at 6,492.70 and the French CAC-40 index increased 0.2% at 5,949.47, a morning after the first round of the French presidential election.

Advancers

ABN Amro, a Dutch bank, gained 1.7% after it agreed to the largest-ever banking takeover from the Barclays worth around 67 billion euros, or $91.2 billion. Scottish & Newcastle shares rose 2.4% after reports that SABMiller and Diageo held detailed talks about a joint bid for the U.K. brewer. Novartis added to pharmaceutical sector earnings news. Its shares rose 1.8% after it announced that its first-quarter net income rose 11% to $2.17 billion, with sales up 18% to $9.82 billion.

Food company Nestle also held to its fiscal year earnings guidance on Monday. Shares rose 1.7% after Nestle said that it is still expecting organic growth of between 5% and 6% this year, with improved constant currency earnings before interest and tax margins for the fiscal year.

In the auto sector, BMW shares rose 2.5% after J.P. Morgan upgraded the company to overweight from neutral on Monday. Peugeot also rose 0.8% after reports that the French automaker could be planning to restructure in France after the presidential election, a move that could affect around 10,000 jobs.

Decliners

Barclays dropped 1.7 % after the bank bid for the Dutch bank. AstraZeneca lost 1.4 %. The maker of the Nexium ulcer medicine agreed to buy MedImmune to gain flu vaccines and an antiviral medication for babies. Societe Generale SA declined 2 % after second-biggest bank by market value in France denied it was in merger talks on April 20.

Oil and precious metals

Crude oil advanced on concern supplies from Nigeria will be disrupted just as demand for gasoline is surging. Crude oil for June delivery rose 42 cents, or 0.7 %, to $64.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June gained 86 cents, or 1.3 %, to $67.35 a barrel in electronic trading on the ICE Futures exchange.

Gold fell from an 11-month high after the dollar advanced against the euro, denting investor demand for the precious metal as an alternative investment. Silver also declined. Gold for immediate delivery dropped $1.60, or 0.2 %, to $690.35 an ounce. Silver declined 4.5 cents to $13.895 an ounce. Palladium for immediate delivery fell 50 cents to $384.50 and platinum dropped $4 to $1,324 an ounce.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Monday morning. The euro traded at $1.3562, down from $1.3601 late Friday in New York. The British pound traded at $1.9986, down from $2.0036. The dollar fetched 118.44 Japanese yen, down from 118.74.