RBS group set to acquire ABN as Barclays abandons bid

05 October 2007

Mumbai: A group led by Royal Bank of Scotland is set to acquire ABN Amro after UK''s Barclays dropped its bid for the Netherlands'' biggest bank.

Barclays said it would withdraw from the bid battle as it failed to win the backing of shareholders controlling 80 per cent of ABN''s shares. Barclays, the original suitor for the Dutch banking group, said it had received only 0.2 per cent of ABN shares by the time its offer closed on 4 October.

Barclays, however, will receive a euro 200 million "break fee" from ABN, which the bank said significantly exceeds the cost of the bid.

Analysts believe the $98.5 billion (euro 71billion / £49billion) RBS offer would prevail, since it has a much larger cash element. RBS is partnering Dutch-Belgian Fortis NV and Spain''s Banco Santander for the bid.

The outcome was expected as Barclays, which offered more in shares for ABN, saw its bid slip behind euro 71 billion following a fall in its share price.

Barclays was originally the preferred suitor as it planned to keep the business intact, but ABN switched to a neutral stance after the gap between the two bids widened.