ABN withdraws backing for Barclays bid, profit dips

Dutch bank ABN Amro formally withdrew its recommendation of a take-over offer by Barclays but made clear it still favours the British bank's offer over a higher bid from Royal Bank of Scotland's consortium.
The Netherlands' biggest bank, the target of a 64 billion-euro ($87.4 billion) offer from Barclays and a 70.6 billion-euro bid from RBS, Belgium's Fortis and Spain's Santander, also reported a 7.1 percent decline in its second-quarter net profit on Monday.
ABN originally backed Barclays when announcing their merger in April, in a friendly deal that would have kept ABN mostly intact and the combined group's headquarters in Amsterdam, but withdrew its recommendation even after Barclays sweetened its all-share offer last week to include some cash.
But ABN did not endorse the rival RBS consortium's mostly cash offer, saying Fortis faced a challenge in raising the capital needed to fund its part of the bid for ABN. "We continue to support Barclays' offer because we feel overall Barclays' merger plan is to the benefit of all stakeholders," Chief Executive Rijkman Groenink told reporters, but added ABN was taking a neutral stance on the competing bids. "The consortium's offer is uncertain. There is the Fortis shareholders meeting that has to approve the share issue," Groenink said.
Fortis shareholders are due to vote next week, on August 6, on a key rights issue to raise the cash. Barclays said it will continue with its bid and waived a pre-condition of its latest offer that ABN recommends it.
Under take-over rules ABN could still make a fresh recommendation but is not required to do so. "We are confident that our revised offer delivers the value, stakeholder benefits and certainty that will allow the boards to support a recommendation in due course," Barclays Chief Executive John Varley said in a statement.
ABN could move to recommend either bidder, depending on how the consortium's financing shapes up and whether the Barclays share price rises to improve the value of its bid.
The RBS-led offer, which would result in a break-up of ABN, is 93 percent in cash and worth 38.08 euros per ABN share at Monday's market prices, compared with Barclays' bid at 34.4 euros per share. ABN has 1.855 billion shares outstanding.
ABN also reported on Monday it made a net profit of 1.13 billion euros in the second quarter, down from 1.216 billion euros in the same period last year but ahead of the average forecast of 1 billion euros given in a Reuters survey of five analysts. Operating profit rose 12.8 percent to 5.45 billion euros.