Friday, July 13, 2007
Today the Dutch Supreme Court overturned the provisional injunction imposed by the Dutch Enterprise Chamber on May 3, 2007 restraining ABN AMRO from completing the sale of LaSalle to Bank of America without approval of its shareholders (read ABN Amro's reaction here). The decision means that the sale will almost now certainly proceed. This transaction was generally viewed at the time as a crown-jewel sale implemented to deter other bidders from interfering in Barclay plc's recommended takeover of ABN Amro. As such, the decision and likely sale are a setback for the European consortium of banks (Royal Bank of Scotland Group Plc, Fortis Group and Banco Santander) who have tabled a competing bid for both LaSalle Bank and ABN Amro. The RBS consortium's current offer is 79% cash and is valued at $97.78 billion while Barclays's all-stock offer currently values ABN at €63.24 billion.
The ruling is not a complete surprise. Last month the legal adviser to the Supreme Court, the advocate general, had opined that Dutch law didn't require a shareholder vote. Still the equities of the situation spell a different result -- ABN Amro has done everything in its power to tilt this bidding contest towards its chosen suitor, Barclays, to the detriment of its shareholders. Today is not a winning day for shareholder rights advocates.
NB. The result would likely be the same in the United States. ABN Amro's merger with Barclays is a stock one and there does not appear to be any change of control. Accordingly, ABN Amro's boards' decision to merger would be reviewed by a Delaware court under the business judgment rule and "Revlon duties" would not apply. And there would likely be no required vote on the LaSalle Bank sale as it does not appear to constitute "all or substantially all" of ABN Amro's assets, the prerequisite for such a vote under Delaware law. Nonetheless, the Delaware courts, of late, have been willing to step in to halt inequitable practices in M&A transactions (e.g., Hollinger Inc. v. Hollinger International Inc).