Barclays concedes defeat, RBS team close in on ABN

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LONDON/AMSTERDAM, Oct 5 (Reuters) Britain's Barclays conceded defeat in the 7-month battle for ABN AMRO on Friday, as a trio of rivals led by Royal Bank of Scotland moved in to clinch the world's biggest bank takeover.

The outcome of the fight for the Netherlands' biggest bank was widely expected after a fall in the Barclays share price saw its bid slip behind the 71.8 1 billion mostly cash offer from the RBS-led team.

The offer from the consortium -- which also includes Dutch-Belgian Fortis and Spain's Santander -- closed today, but the banks are not expected to make an official statement until shares are counted over the weekend.

The trio could publish the results as early as Monday, although it has until the end of next week to declare the bid unconditional, a key step before it seals the deal.

Barclays officially withdrew its bid after receiving just 0.2 per cent of ABN shares by the time its offer ended yesterday. But as it closed the door on the saga, the bank said it had stuck to its promise not to overpay -- feeding a debate over the cost of the RBS-led victory in turbulent markets.

''We have been absolutely clear in terms of the discipline we bring to this opportunity. It goes with that that we should be in a position where we could walk away,'' Barclays Chief Executive John Varley told Reuters.

''I feel a sense of disappointment, of course I do, because I would like us to have merged with ABN AMRO. But it is disappointment -- not despondency and not dependency.'' Barclays was originally the preferred suitor as it planned to keep the business whole, but ABN switched to a neutral stance after the gap between the two bids widened.

Barclays will receive a 200 million-euro ''break fee'' from ABN, which it said significantly exceeds the cost of the bid.

Analysts had speculated that failure would make Barclays a takeover target itself, but the recent logjam in loan markets has seen such talk fade, and Varley dismissed any concern.

''I have complete confidence in the independent future of Barclays,'' he said in a telephone interview.

DIVIDE -- AND CONQUER? Attention will now turn to the consortium's mammoth task of breaking up ABN, which has more than 4,500 branches across 53 countries, integrating its businesses and delivering cost savings to prove it has not overpaid.

The deal is seen by many as an example of the excesses of the merger boom, when bankers were confident they could carry off increasingly complex deals, and progress is likely to be viewed as test case for international banking takeovers.

RBS, an acquisitive bank that beat integration targets with its 21 billion-pound purchase of larger rival NatWest in 2000, faces the biggest task in swallowing ABN.

It is taking ABN's wholesale and investment banking unit and its Asian businesses, and aims for just over 2 billion euros of cost savings.

Santander will get ABN's Italian and Brazilian operations, while Fortis will take on the Dutch business, as well as its wealth and asset management operations.

RBS will pay almost 16 billion euros for its ABN businesses, including 4.5 billion in shares and the rest from funds already raised. Fortis and Santander will fund their portions -- 24 billion and 19.5 billion euros, respectively -- from rights issues and with cash raised from disposals or in capital markets.

The consortium has already made some savings on the cost of the deal by buying up 8 percent of ABN in the market.

The deal also marks another victory for activist shareholders, who called for ABN to be put up for sale in late February after years of underperformance and will benefit from an approximate 50 percent rise in its share price since then.


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