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Global banking the acquisition of ABN amro / and the role of fortis
Finance & Accounting
Pages 4 (1004 words)
The acquisition of ABN AMRO and the Role of Fortis Part A) The ABN AMRO acquisition is known as the biggest banking takeover in the history and one of the failed mergers for several reasons. Royal Bank of Scotland's (RBS), Fortis and Banco Santander formed a consortium and made a joint bid for taking over ABN AMRO bank during 2007…
Barclays were already negotiating with them for a friendly takeover; however, the RBS led consortium approached with a proposal that aimed at acquiring AMRO's prized asset, LaSalle Bank, based at Chicago in the US. The offer was turned down because that necessitated a split up in ABN AMRO’s assets. Barclays’ offer was initially superior in the sense that they did not insist for any split in ABN AMRO's assets and offered a sum of USD 91.2 billion for entire takeover. Countering Barclays offer, RBS consortium offered much higher price to the tune of USD 99 billion. Further negotiations continued between the concerned parties and a deal was struck at $100 billion between ABN AMRO and RBS consortium; however, the acquisition deal soon brought an unparalleled disaster for the consortium members (Kennedy, 2008). The fallouts of this buyout were catastrophic to the consortium members. Firstly, the consortium paid very high price – most of them in cash for this acquisition causing a distress to their own financial conditions. Unfortunately, the timing of this deal coincided with the famous subprime crisis that emerged across the US leading to financial upheavals across most parts of the world. Valuation of the assets in the portfolio of banks came down crashing across all developed nations. ...
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