Bank of America launches lawsuit against ABN over sale of LaSalle
Saturday, 5 May 2007
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Bank of America hit ABN Amro with a multibillion-dollar lawsuit yesterday to try to secure the acquisition of the Dutch Bank's US subsidiary, La Salle.
The lawsuit follows the decision by a Dutch court to oblige ABN to put the $21bn(£10.6bn) deal to a shareholder vote in response to a plea from a Dutch shareholder action group.
A Royal Bank of Scotland-led consortium is expected to move ahead with a conditional €72bn (£49.5bn) bid for ABN, in the hope that the decision of the Dutch court will enable it to secure control of La Salle. However, the Bank of America lawsuit asks a US judge to block the sale of La Salle to anyone other than ABN and to prevent ABN from even talking to another potential buyer.
The US bank argues that it is difficult to expand in Chicago without doing deals, and that there are "none that compares" with the La Salle acquisition.
As such, a failure to secure La Salle, Bank of America argues, would be damaging and merit huge compensation. The lawsuit highlights that ABN told Bank of America it would not require shareholder approval to do the deal.
ABN sought guidance from the Dutch court on whether the "go-shop" clause in its contract with La Salle - allowing it to seek out other offers - remained valid. If the clause is valid, Royal Bank would still have to make an offer for La Salle and ABN by close of play on Sunday, and Bank of America would have the right to match it within five days.
Bank of America, in the lawsuit, said such a clause was "highly unusual" and it had never been part of any deal it had been involved with in the past.
The three principles in the RBS consortium met ABN last night to flesh out the details of their offer. They are seeking an immediate recommendation from both ABN's supervisory and management boards, given that they argue it is superior to the current bid by Barclays, which is supported by the ABN board.
The bid situation is causing tensions within ABN with differences of opinion between members of the management and supervisory board. The latter cannot recommend a deal without the management board's agreement, and ABN chief executive Rijkman Groenink is opposed to the consortium proposal.
Theoretically, the supervisory board could seek the dismissal of the entire management board to proceed with the RBS proposal. However, such a radical step could pour petrol on an already explosive situation that is threatening the corporate business of ABN.
There are also tensions in the consortium, with Banco Santander, which hopes to take the Brazilian arm of ABN, likely to lose its share in its Mexican joint venture with Bank of America. The latter, furious at Santander's involvement in an attempt to derail its acquisition of La Salle, is thought to be seeking a replacement, with its eyes on Santander's bitter Spanish rival BBVA.
Directors at ABN, worried about the legal implications of what is going on, are understood to have sought independent advice. Shares in Barclays slipped 12p to 732.5p yesterday, while RBS fell 16p to1,947p. ABN, meanwhile, gained 0.3 per cent to €36.70.
