ABN Amro in bid for Generale
ABN's cash and shares bid is 15 per cent higher than an agreed offer by Fortis, the Belgian banking group. However, analysts are not ruling out a higher offer from Fortis, though they said the price is already looking expensive. Generale Bank's board of directors is scheduled to meet today to consider the competing bids.
While ABN Amro claimed its bid offered "clear advantages" to all parties over the Fortis offer, analysts said the Dutch giant would struggle to overcome an agreement between Fortis and Generale's largest shareholders which have already undertaken to accept the Fortis terms.
Societe Generale de Belgique, the largest investor with a 29.2 stake, repeated its commitment yesterday. "Our sale is definitive to Fortis. The ABN AMRO bid will certainly not be looked at," it said.
Analysts expressed surprise at ABN's move but said it fitted the bank's strategy of seeking to strengthen its position in Europe. "With the coming of EMU and the euro, they feel they have to be bigger to survive. It will definitely be a tough fight," said James Alexander of Dresdner Kleinwort Benson.
Ton Gietman of HSBC added: "Within Europe there is not so much they can acquire for the time being. The French and German markets are difficult to enter, so Belgium is a good alternative, especially since Generale also operates in France."
Other analysts said Fortis still appeared to have the upper hand. One said. "Fortis has already made a decent offer - and they're better equipped with their Belgian personal relationships. If ABN Amro gets 55 per cent of Generale's shares, they may have a case, but I doubt whether it will get that far. Fortis might have to make a sweetened offer."
ABN chairman Jan Kalff forecast ABN Amro would win the bid battle. He said consultations with Generale Bank's executive committee would now resume after eight months of clandestine negotiations prior to the Fortis bid. "We have already reached such a firm footing in recent months ... that we trust the same enthusiasm that existed then (prior to the Fortis bid) still exists."
He continued: "We must look further ahead than tomorrow. Globally, increasingly large combinations are being formed, including in the financial sector. ABN Amro also arose in the early 1990s from a merger which predated developments at that time. We consider the time ripe for another similar step." He added that in 10 years time there would only be "a few banks that really count on a European level."
ABN is offering 19 of its own shares and 9,000 Belgian francs for every Generale share held - a total offer of 27,095 Belgian francs, valuing Generale at 24.5bn guilders (pounds 7.8bn.)
However, the ABN AMRO offer may run into problems with the European regulatory authorities. ABN is already one of the five largest banks in Europe.
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