ABN indicates it still supports Barclays bid

ABN Amro indicated its continued support for a take-over bid by Barclays, even after the Dutch bank formally withdrew its recommendation for the agreed deal.
Rijkman Groenink, chief executive, said it would have “looked a bit silly” for the bank to continue recommending Barclays’ bid, which is currently worth about €34.60 a share – substantially below a €38.10-a-share break-up bid from a consortium led by Royal Bank of Scotland.
However, he said: “We continue to support the Barclays bid, but we will engage with both parties.”
Barclays last week sweetened its bid in an attempt to compete with the consortium’s offer, which is largely in cash. But the value of its cash-and-shares bid has been undermined by the broader stock market sell-off.
The consortium has not asked for ABN Amro to recommend its bid. Some executives believe a hostile bid would make it easier for the consortium to carry out the cost-cutting its members believe is necessary.
Both Barclays and RBS have set out plans to boost ABN Amro’s investment banking profits by cutting costs and selling more products to the Dutch bank’s clients.
People involved in the deal also suggested ABN Amro’s decision to withdraw its recommendation from Barclays’ bid was aimed at limiting the scope for legal action by disgruntled investors.
Mr Groenink was speaking as ABN Amro reported pre-tax profits of €2.1bn for the first half of the year, including a 94 per cent jump in profits from its global markets division.
Mr Groenink said Barclays shares – which closed on Monday at 681p in London – were “structurally undervalued” when compared with its rivals and could rise before the end of the bidding process, which is expected to last at least two months.
He also indicated that the consortium still had to clear several hurdles before ABN Amro could consider recommending its offer. Fortis, the Belgo-Dutch group, will next week seek approval from its shareholders for its portion of the deal, which includes a €13bn rights issue.
The Dutch central bank must also give its approval for both bids. ABN Amro shares closed up slightly at €35.