Barclays offers to acquire ABN AMRO/Bank of America agrees to acquire LaSalle

Dutch bank ABN Amro today announced its backing for the largest-ever banking takeover, an offer lodged by U.K.'s Barclays valuing the bank at $91.2 billion. In a related transaction, ABN Amro has agreed to sell LaSalle Bank Corporation to Bank of America for $21 billion in cash.  After a return of $5 billion in excess capital, Bank of America reports that its net cost will be $16 billion.  Bank of America will need the usual bank regulatory clearances for the transaction and so it will likely not close its purchase until late 2007 or 2008. 

The LaSalle transaction is likely an attempt to influence the course of bidding for ABN Amro.  Speaking at a press conference, ABN Amro's CEO Rijkman Groenink repeated an invitation to a rival group of bidders, which includes Royal Bank of Scotland, Banco Santander and Fortis, to meet later on Monday to explore a competing offer. He also stated that ABN Amro had negotiated an "out" for possible other bidders for LaSalle.  If successful, the consortium has announced it would break up ABN Amro, with Royal Bank of Scotland taking LaSalle. But the Bank of America agreement clearly places an obstacle in front of the consortium bid.  And this was likely ABN Amro's intentions despite its CEO's words this morning.  For the sale of LaSalle, ABN Amro does not need the permission of its shareholders under Netherlands law (where ABN Amro is organized) because LaSalle represents less than 30% of the bank's total assets. In addition, the Netherlands does not place restrictions on crown-jewel lock-ups.  The documents for the sale have not been made public yet, but one would guess that Wachtell, counsel for Bank of America on the deal, fought hard to make this "out" as narrow as possible, and likely received the cooperation of ABN Amro in the process.  I'll post more on this once the agreement is made public.