ABN Amro takeover battle enters the final stages

The Royal Bank of Scotland consortium bidding for ABN Amro yesterday reserved the right to waive a condition that its offer must receive acceptances from shareholders holding at least 80% of its bid target, were it to win straight majority control.

With bids for Amsterdam-based ABN due to close next week, the Royal consortium remains way ahead of London-based Barclays in the world's biggest-ever banking takeover battle.

The break-up bid from Royal and its partners, Belgian-Dutch insurer and bank Fortis and Santander of Spain, was last night worth 37.83 a share or 70bn (£49bn) in total. Barclays' bid was worth 31.34 a share or 58bn in aggregate.

The price of ABN shares is indicating the market's firm belief that the Royal consortium will win the day. ABN shares yesterday edged up a further 0.14% to 36.95, just below the value of the Royal camp's bid and way ahead of that of the Barclays offer.

Fortis, the only remaining member of the consortium still awaiting competition clearance of its part in the consortium bid from the European Commission, has emphasised its confidence that this will be obtained by the extended deadline of next Wednesday.

Consortium members are also confident of receiving the green light from the US Securities & Exchange Commission next week.

The consortium as a whole has received regulatory approval from the Dutch authorities. Barclays has already received Dutch, European Union, and SEC approval.

Barclays' offer, which is mainly in shares, is due to close next Thursday. The bid from the Royal camp is due to close the following day.

Fortis continued its programme of disposals of non-core assets yesterday to help fund its part in the bid - selling a 4% stake in Banco Comercial Portugues to international investors. Based on yesterday's closing price of 2.91 for the Portuguese bank's shares, Fortis will receive about 420m for this stake.

The consortium members said yesterday in a joint statement: "As contemplated by the offer documentation, RFS Holdings (the consortium bidding vehicle) hereby announces that it reserves the right, but is not obligated, to waive the minimum acceptance condition to the offer after expiration of the offer, in the event that the number of ABN Amro ordinary shares validly tendered and not properly withdrawn in the offer, together with all ABN Amro ordinary shares held by RFS Holdings, represents not less than a majority of the issued and outstanding ABN Amro ordinary shares This announcement does not constitute a waiver of the Minimum Acceptance Condition itself." The Royal consortium recently doubled its effective stake in ABN to about 8%, using derivatives.

Reserving the right to lower the minimum required acceptances is a fairly standard tactic at this stage. The appetite of ABN investors next week for the consortium bid will dictate whether or not Royal and its partners feel a need to actually lower it. Royal and its partners also underlined their willingness yesterday to proceed with the transaction without prior "Hart-Scott-Rodino" competition approval in the US, which a source said they could not obtain in any case until such time as they were to take control of ABN and obtain the information required to make the relevant filings to the authorities.

The consortium said: "RFS Holdings hereby announces that it will not have obtained, prior to the expiration of the offer, approval under the HSR Act (Hart-Scott-Rodino Antitrust Improvements Act of 1976) for the proposed reorganisation of ABN Amro following completion of the offer and hereby waives its right to invoke the relevant clause of condition (g) to the offer as a result of not having obtained this approval."

Royal wants to acquire the vast bulk of ABN's global corporate banking and financial markets activities, and operations in Asia, in the consortium's break-up bid. Its share of the deal would be about 16bn.