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ABN AMRO (ABN)
Barclays / RBS Consortium / Bank of America (BoA)
Competing Offers / Deal Litigation
Summary
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 ABN
announced an $88B merger with Barclays
- One of the largest-ever M&A deals
- ABN
also agreed to sell LaSalle Bank to BoA for $21B
ABN then got a competing offer from a consortium
led by Royal Bank of Scotland (RBS)
- BoA then sued ABN over its deal for LaSalle
- See Timeline
immediately below for details
News
- Stock charts
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Timeline
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4.23.07
ABN
- Barclays announce planned merger
- Stock merger values ABN at $88B
ABN
agrees to sell LaSalle Bank to BoA
- Barclays - ABN merger is contingent on sale of LaSalle
for at least $21B
- BoA agreement includes a "go shop" provision that
gave ABN 14 days to solicit a "superior proposal" for LaSalle
- BoA given five business days to match
- BoA is obligated to divest enough of its deposits to come under
nationwide 10% deposit cap
Late April 2007
RBS-led
consortium makes competing offer for ABN AMRO
- Royal Bank of Scotland, Fortis, and Banco
Santander
5.03.07 Dutch
court stays sale of LaSalle Bank
- Rules that an ABN AMRO shareholder vote is
required
5.04.07
Bank
of America sues ABN AMRO
5.07.07
ABN
rejects offer from RBS consortium
5.29.07
RBS
consortium makes $95.6B unsolicited offer
6.11.07
Barclays
files Form F-4 with SEC
7.16.07
RBS
consortium reaffirms offer
- Drops condition that LaSalle not be sold
- Offers remains 38.40 per share but cash
component is increased to 93%
- Press release
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Bank of America Sues ABN AMRO
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Brings
suit in Southern District of New York
- Pretrial conference delayed until after July 23
- By joint request of parties, given pending
appeals to Netherlands Supreme Court
- Had been scheduled for June 15
- Joint request of parties 6.11.07
Endorsed by judge on 6.11.07
- ABN AMRO shareholders counter-sue Bank of America
BoA
claims that ABN AMRO's contractual representations were false
- ABN has full authority ... to consummate
transaction
- No approval of ABN stockholders is necessary
- Valid and binding obligation of ABN
- Won't violate applicable law
BoA
asserts that go shop provision doesn't apply
- Asserts that "go shop" provision only
applies to an acquisition of LaSalle, but not to "a bid to acquire ABN AMRO
'substantially as a whole.'"
- Go shop provision:
Agreement §5.3(b)
- These provisions are an exception to typical M&A
no shop provisions and are now typical in
private equity deals
- Until this deal, "Bank of America has never
agreed to (and has never been asked to agree to) a go shop provision."
BoA's
claims
- Breach of contract; Injunctive relief
- To block sale of LaSalle Bank to a third party
- Breach of contract; Specific performance
- To order sale of LaSalle Bank to Bank of America
- Breach of contract; Money damages
- "By reason of the foregoing, Bank of
America stands to sustain billions of dollars of foreseeable damages, including,
but not limited to, lost profits, financing costs, and transaction costs."
- Unjust enrichment; Quantum meruit
- That ABN AMRO "was able ultimately to
obtain an acquisition price for ABN AMRO as a whole billions of dollars in
excess of what ABN AMRO would have otherwise obtained."
Select
contract provisions
- Authority; No conflict representation: §3.3
- No shop / go shop covenant: §5.3
- Materially burdensome regulatory condition:
§6.1(a)
- Exception for nationwide 10% deposit cap
- Break-up
fee:
§8.1(f)
$200mm break-up fee
Commentary
- Should any BoA damages be capped by amount of
break-up fee?
- Note: BoA claims are similar to claims being made
by Johnson & Johnson in its suit against Guidant and Boston Scientific
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Advisors
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Financial
- ABN: UBS
- Barclays: Citigroup / Credit Suisse / Deutsche
Bank
- BoA: Banc of America Securities
Legal
- ABN: Davis Polk / Allen & Overy
- Barclays: Clifford Chance / Sullivan & Cromwell
- BoA: Wachtell Lipton
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ABN - BoA Agreement Hyperlinked
Related Topics
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