Banking News
- Barclays lifts ABN offer with China help
Date: 24-Jul-2007 Sources: (Shenzhen Daily)
BRITISH bank Barclays raised its bid for Dutch group ABN AMRO to 67.5 billion euros (US$93 billion) yesterday, helped by some of the biggest ever overseas investments by China and Singapore.
Barclays said its new bid included 24.8 billion euros in cash and was up from its previous all-stock offer of 65 billion euros. The offer is still below a rival 71-billion-euro bid from a group of European banks led by Royal Bank of Scotland (RBS).
A deal with either Barclays or the RBS team, which includes Spain's Santander and Belgian-Dutch group Fortis , would be the biggest ever bank takeover.
Barclays, Britain's third-biggest bank, said its new offer had not been recommended by ABN AMRO, but chief executive John Varley said he hoped and expected that it would be.
ABN AMRO, which has come under pressure from some shareholders to back the higher RBS consortium bid, said it was assessing both offers, but noted the planned strategic cooperation with China and Singapore would boost the growth opportunities available to the combination with Barclays.
Barclays said China Development Bank and Singapore stake investor Temasek had agreed to invest up to 13.4 billion euros in Barclays.
An initial investment by them of 3.6 billion euros would be used by Barclays to buy back shares during the takeover process, which analysts said would help underpin its share price.
The remainder of the investment from China and Singapore, almost 10 billion euros, will be made if Barclays wins ABN.
Barclays also reported a 12 percent rise in first-half pretax profit to 4.1 billion pounds (US$8.5 billion), compared with an average forecast of 4.0 billion pounds in a Reuters Estimates poll of six analysts.
Some analysts believe Barclays could come under pressure from its shareholders to back down in the face of the greater firepower of the RBS consortium, but Barclays president Bob Diamond told reporters that he was confident of their support.
'There are a lot of shareholders who would like to have the equity of the combined business going forward,'he added.
China Development Bank will take a 3.1 percent stake in Barclays, potentially rising to 5 percent of an enlarged Barclays, while Temasek will take a 2.1 percent stake in Barclays, potentially rising to just over 3 percent.
Barclays CEO Varley said he was 'entirely comfortable?with the Chinese investment.
'I think it will be regarded as a very significant event in global markets, it's by far the biggest external investment ever made by China,'Varley said.
Barclays is the latest in a string of bets on financial companies by Temasek. About a third of its US$85 billion portfolio is made up of financial services firms and last year it bought an 11.6 percent stake in U.K.-based Standard Chartered.
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