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Barclays deposits $91B bid on bank rival

The deal for ABN Amro may be a record in global banking. Other bids still may emerge.

AMSTERDAM, Netherlands - ABN Amro NV agreed Monday to a 67-billion euro ($91.16-billion) takeover by Barclays PLC and a sale of its U.S. assets, holding off a bid by three banks that would have carved up the Netherlands' largest bank.

The proposed chief executive of the new group, Barclays CEO John Varley, called the deal "the largest merger ever in global financial industry," and said it holds out the promise of growth at a rate twice as fast as global gross domestic product.

A combination of the two companies would create one of the world's largest banks by market capitalization.

Barclays offered 36.25 euros ($49.25) for each ABN share, slightly below Friday's closing price. Varley said the deal represented a 33 percent premium from ABN's price when talks began last month.

Though ABN Amro said the Barclays offer is the best one on the table, it refused to rule out alternative bids and said it would welcome a proposal from a consortium of Royal Bank of Scotland PLC, Spain's Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV.

ABN Amro spokesman Jochem van de Laarschot said the bank was prepared to listen to the consortium but would make no proposals of its own.

He said the Barclays offer was "the best deal going forward and the best opportunity for growth."

The consortium intended to split up ABN and each would get parts of its operations.

Varley said ABN Amro shareholders, who meet this week, faced a stark choice: to either deconstruct ABN by opting for the competing consortium's bid, or to form one of the world's largest banks by accepting the Barclays takeover.

Dutch Finance Minister Wouter Bos, who must approve the deal, said the merger "would fit in the consolidation that is expected to take place within the European banking sector."

The group said it expected to see 3.5-billion euros ($4.8-billion) in annual cost savings by 2010. About 12,800 jobs would be trimmed from the combined work force of 217,000, and 10,800 others would be shifted to cheaper locations, the banks said.

Both banks said they would recommend the deal to their shareholders; both are due to hold annual shareholder meetings Thursday. The merger is expected to be completed during the fourth quarter of this year, the banks said.

Varley said the combined power of ABN Amro and Barclays would provide a solid platform for expansion.

"This is the start, not the end. We are assembling a group uniquely qualified to compete for business all around the world," he said. He singled out Asia as one area for growth.

Bank of America Corp. said Monday it will purchase LaSalle Bank Corp. from ABN Amro North America Holding Co. for $21-billion, filling a big hole in its nationwide branch network by becoming Chicago's largest bank. "Chicago is attractive to us," said Bank of America chairman and chief executive Ken Lewis. Lewis had expressed interest in the Chicago market for months, particularly in Chicago-based LaSalle, which is a top-20 U.S. bank holding company, with $113-billion in total assets. Bank of America said that it expects the deal to increase its earnings per share immediately and that it expects about $800-million in after-tax cost savings. Restructuring costs also are expected to be about $800-million. Bank of America is up against a federal cap that bars it from making acquisitions that would give it more than 10 percent of all U.S. deposits. The bank, which is the nation's second-largest after Citigroup, recently controlled just more than 9 percent.

BofA buys LaSalle Bank

Bank of America Corp. said Monday it will purchase LaSalle Bank Corp. from ABN Amro North America Holding Co. for $21-billion, filling a big hole in its nationwide branch network by becoming Chicago's largest bank. "Although we don't desire to be in every MSA in the U.S., Chicago is attractive to us," said Bank of America chairman and chief executive Ken Lewis during a call with analysts. For the past several months in speeches and conference presentations, Lewis has expressed his bank's interest in the Chicago market, particularly the strength of Chicago-based LaSalle, which is a top-20 U.S. bank holding company, with $113-billion total assets. Bank of America said it expects the deal to immediately enhance its earnings per share and added that it expects around $800-million in after-tax cost savings. Restructuring costs also are expected to be around $800-million, the bank said.

[Last modified April 23, 2007, 23:04:47]