By Jon Menon and Martijn van der Starre
July 13 (Bloomberg) -- Barclays Plc moved a step closer to buying ABN Amro Holding NV for 63.2 billion euros ($87.1 billion) after a court cleared the Dutch company's sale of LaSalle Bank.
The Dutch Supreme Court today said there were ``no grounds'' to block the sale, overturning a lower court ruling that said ABN Amro should have asked shareholders to approve its $21 billion disposal of Chicago-based LaSalle to Bank of America Corp. The decision removes an obstacle to Barclays's agreement to buy the rest of Amsterdam-based ABN Amro in the biggest banking takeover.
ABN Amro would make Barclays the world's No. 6 bank by assets and give Charlotte, North Carolina-based Bank of America the most market share in Chicago, the third-biggest U.S. city. While the decision is a setback for a group led by Edinburgh-based Royal Bank of Scotland Group Plc, which offered 70.9 billion euros for ABN Amro, investors and analysts expect a new bid.
``It is inevitable that the Royal Bank consortium will now bid for ABN ex LaSalle,'' said Len Riddell, fund manager at Martin Currie Ltd., which manages $26 billion including Barclays and Royal Bank shares. Executives at Royal Bank, Banco Santander SA and Fortis ``have put too much effort into this deal to simply walk away.''
ABN Amro's stock rose 0.7 percent to 35.56 euros at 2 p.m. in Amsterdam, exceeding Barclays's bid of 34.37 euros and indicating that investors anticipate a higher offer. Barclays shares rose 0.7 percent to 723.5 pence in London, valuing the company at 47.3 billion pounds ($96 billion).
Shares of Royal Bank, Britain's second-biggest lender, rose 0.5 percent to 637.5 pence in London. The group has offered 38.33 euros a share in cash and stock for ABN Amro.
`Removes Uncertainty'
Barclays, the U.K.'s third-largest bank, agreed to buy ABN Amro on April 23 in a deal that would double Barclays's revenue from consumer-banking, galvanize its push into markets such as India and Brazil, and boost securities trading. It is scheduled to send its formal offer to shareholders by July 23.
``We are pleased to see the Supreme Court has made a very clear ruling,'' Barclays Chief Executive Officer John Varley said in comments passed on by spokesman Alistair Smith. ``The ruling is definite and therefore removes uncertainty from the situation, which is good for ABN Amro customers and employees.''
For Bank of America, the second-largest U.S. bank after Citigroup Inc., the purchase of LaSalle would make it the biggest bank in Michigan and Chicago, ahead of JPMorgan Chase & Co. LaSalle would be Bank of America's largest acquisition since it bought MBNA Corp. for about $35 billion two years ago.
`Extremely Happy'
Bank of America ``is extremely happy'' with the judgment and aims to complete the LaSalle takeover as soon as possible, company spokesman Frans van der Grint said today.
Royal Bank CEO Fred Goodwin likely will resist arguments to drop the ABN Amro bid, said Mike Trippitt, a London-based analyst at Oriel Securities Ltd. in London.
``It is over as far as LaSalle goes,'' said Trippitt, who has a ``buy'' rating on Royal Bank shares. ``It would make sense for them to walk away, as LaSalle was a key part of the deal for Royal Bank, but you get the feeling they are not going to let go.''
Royal Bank's bidding group may now lower its bid by 1 euro a share, said Antony Broadbent, a London-based analyst at Sanford C. Bernstein & Co. In the revised bid, Royal Bank's group would receive $21 billion in proceeds from the LaSalle sale and wouldn't make a payment for breaking up Bank of America's deal, he said.
Royal Bank, which declined to comment on the court ruling, may still try to buy some of LaSalle's U.S. assets, said Simon Willis, a London-based analyst at NCB Group. Bank of America is most interested in expanding its retail franchise in Chicago, while Royal Bank wants LaSalle's commercial-lending operation, he said. ``A sale of some parts is not entirely impossible.''
Legal Wrangling
The Supreme Court's ruling comes almost three months after Dutch shareholder group VEB sought to block the sale of LaSalle to Bank of America by filing a suit with the Enterprise Chamber of the Amsterdam Court of Appeal. The lower court ruled in favor of the VEB, favoring Royal Bank. Barclays, ABN Amro and Bank of America appealed, sending the case to the Supreme Court.
``We are pleased that the Court has upheld our appeal,'' ABN Amro CEO Rijkman Groenink said in an e-mail today. ``We remain committed to acting in the best interests of our employees, clients and shareholders. It is in the interest of all involved parties to allow a transparent and swift process.''
Advocate General
The Advocate General, an adviser to the court, said last month that the sale didn't require shareholder approval. The Supreme Court followed that guidance in today's decision.
``The Supreme Court annuls the Enterprise Chamber's ruling and rejects the VEB's request to take immediate measures,'' Supreme Court Vice Chairman Hans Fleers said in The Hague today.
The ruling doesn't prevent shareholders from seeking to block the sale of LaSalle. VEB director Peter Paul de Vries, speaking to journalists after the ruling, criticized the decision.
``At this moment it's very likely the LaSalle sale will happen, but the takeover battle is not over,'' De Vries said. ``Everyone who thought shareholders had an extremely big influence was wrong.''
Goodwin was counting on LaSalle to boost Royal Bank's U.S. unit, where profit is flat after $13.6 billion of acquisitions during the past six years. The group's offer for ABN Amro ``has been structured and built, crafted, designed, whatever you call it, around the inclusion of LaSalle,'' Goodwin said at a May 29 conference in London.
Splitting up LaSalle
Royal Bank also wants ABN Amro's Asian operations and corporate banking business. Santander, Spain's No.1 bank, would expand into Italy and double its market share in Brazil with the acquisition of ABN Amro.
Fortis, the largest Belgian financial-services company, is seeking the Dutch retail banking arm and ABN Amro's asset- management and private bank units to create a ``Benelux leader.''
Barclays and the Royal Bank-led group last week won extensions to July 23 for submitting formal offer proposals to shareholders pending today's ruling.
``I don't think this will stop Royal Bank,'' said Dave Bradbury, who helps manage about $13 billion in assets including Royal Bank and Barclays stock at Canada Life Ltd. in London. ``We will have to wait and see what their next move is.''
To contact the reporter on this story: Jon Menon in London: jmenon1@bloomberg.net Martijn van der Starre in Amsterdam vanderstarre@bloomberg.net ; Ben Livesey in London blivesey@bloomberg.net
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