FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of May 2007
Commission File Number: 001-10306
The Royal Bank of Scotland Group plc
Business House F, Level 2
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ, DEPOT CODE: 045
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
| Form 20-F X | Form 40-F |
| Yes | No X |
29 May 2007- Fortis, RBS and Santander (collectively, the "Banks") Offer
Superior Value for ABN AMRO Shareholders, Significant Benefits for Customers and
Employees
- PROPOSED OFFER VALUES ABN AMRO AT €38.40 PER ABN AMRO SHARE
- TOTAL VALUE OF €71.1 BILLION, WITH 79% OF CONSIDERATION IN CASH (1)
1. Transaction expected to lead to substantial value creation
- ABN AMRO contains good businesses widely spread across a range of
attractive markets, but seeks combination with partner
- Combined businesses expected to have enhanced market presence and growth
prospects with the Banks as partners
- Greater and more certain transaction benefits than with a single partner
2. Banks confirm the terms of their proposed Offer
- €30.40 in cash plus 0.844 New RBS Shares for each ABN AMRO Share (2)
- Valued at €38.40 per ABN AMRO Share, a 13.7% premium to the value of
Barclays' proposed offer (3)
- Total value of €71.1 billion; €8.6 billion higher than Barclays' proposed
offer (4)
- Approximately 79% of the consideration in cash, providing greater
certainty of value than Barclays' proposed offer
- Proposed Offer not subject to any financing condition, with capital
raisings fully underwritten
- Proposed Offer conditional, inter alia, on result of ABN AMRO shareholder
vote on sale of LaSalle
- Consideration includes €1.00 in cash to be retained by the Banks pending
resolution of the LaSalle Situation
3. Orderly business reorganisation expected to result in stronger
businesses
- Fortis (33.8% of consideration, €24.0 billion) (5): Will create a market
leader in Benelux, while capitalising on the ABN AMRO brand, and extend the
international growth potential in Fortis' wealth and asset management
platforms
- RBS (38.3% of consideration, €27.2 billion) (5): Will create a
strengthened platform for growth outside the UK, leading corporate and
institutional bank globally, leading retail and commercial bank in the US
and accelerated opportunities in Asia
- Santander (27.9% of consideration, €19.9 billion) (5): Will create a top 3
bank in Brazil and establish retail presence in the Italian market
- RBS will lead the reorganisation, with shared assets being managed for
value
4. Expected benefits for customers and employees
- Customers will gain from enhanced presence, product strengths and
distribution capabilities, and increased scale and efficiency
- Consortium plan creates sustainable platforms for increased long-term job
creation and enhanced opportunities for employees
- No plans for significant offshoring of jobs
- Fewer employees expected to lose their jobs than with Barclays' proposals
5. Banks expected to generate substantial transaction benefits
- Aggregate estimated cost savings of €4.23 billion by the end of 2010
- Aggregate estimated profit enhancements from revenue benefits of €1.22
billion by the end of 2010
- Benefits well balanced across activities and geographic regions
6. Banks' extensive experience and proven track records reduce integration
risk
- Extensive knowledge of markets in which ABN AMRO has major businesses
- Strong track records in large scale integration
- Projected synergies based on achievable objectives
7. Value and EPS enhancing for the Banks (6)
- Fortis: expected to be 4.3% cash EPS enhancing by the end of 2010,
expected return on investment on a cash basis of 11.2% in 2010
- RBS: expected to be 7.3% adjusted EPS enhancing by the end of 2010,
expected return on investment of 13.5% in 2010
- Santander: expected to be 5.3% EPS enhancing by the end of 2010, expected
return on investment of 12.7% in 2010
Superior value for ABN AMRO shareholders
Significant benefits for customers and employees
(1) Based on undiluted number of shares, as set out in Appendix IV, and on the
price of RBS Shares of 642.5p at the close of business on 25 May 2007
(2) Including €1.00 in cash to be retained by the Banks pending resolution of
the LaSalle Situation
(3) Based on the price of Barclays ordinary shares of 712.5p at the close of
business on 24 April 2007, the day before the Banks first announced details of
their proposals including a price indication, and on the price of RBS Shares of
642.5p at the close of business on 25 May 2007
(4) Based on undiluted number of shares, as set out in Appendix IV, and on the
price of Barclays ordinary shares of 712.5p at the close of business on 24 April
2007, the day before the Banks first announced details of their proposals
including a price indication, and on the price of RBS Shares of 642.5p at the
close of business on 25 May 2007
(5) Share of consideration including share of consideration for shared assets,
as set out in Section 2, and based on undiluted number of shares, as set out in
Appendix IV
(6) Further details are set out in Section 7
Enquiries
FORTIS
Jean-Paul Votron, Chief Executive Officer
Gilbert Mittler, Chief Financial Officer
Press: Wilfried Remans (Brussels) +32 2 565 35 84
(Utrecht) +31 30 226 32 19
Investor Relations: Robert ter Weijden (Brussels) +32 2 565 53 78
(Utrecht) +31 30 226 32 20
RBS
Sir Fred Goodwin, Group Chief Executive
Guy Whittaker, Group Finance Director
Press: Andrew McLaughlin +44 131 523 2205
Investor Relations: Richard O'Connor +44 207 672 1758
SANTANDER
Alfredo Saenz, Chief Executive Officer
Jose Antonio Alvarez, Chief Financial Officer
Press: Peter Greiff / Angela Roche +34 91 289 5211
Investor Relations: Angel Santodomingo +34 91 259 6514
Financial Adviser to the Banks and Underwriter
MERRILL LYNCH INTERNATIONAL +44 20 7628 1000
Matthew Greenburgh
Andrea Orcel
Henrietta Baldock
Richard Slimmon
Contents
Overview of the Banks' Proposed Offer for ABN AMRO
Appendix I: Other Proposed Offer Details
Appendix II: Pre-conditions to the Proposed Offer
Appendix III: Proposed Offer Conditions
Appendix IV: Sources and Bases
Appendix V: Definitions
Please also refer to the separate announcements issued by the Banks today.
FORTIS, RBS AND SANTANDER PROPOSED OFFER FOR ABN AMRO
1. Transaction expected to lead to substantial value creation
ABN AMRO, the Banks believe, contains good businesses and customer franchises
widely spread across a range of attractive markets. However, ABN AMRO has
acknowledged the opportunity for it to deliver benefits for its customers and
employees and generate growth and additional value for its shareholders by
combining with a partner and selling parts of the ABN AMRO Group.
Because of the Banks' comprehensive strategic fit with ABN AMRO across its
activities, the Banks expect that, following their acquisition of ABN AMRO, they
will be able to create stronger businesses with enhanced market presence and
growth prospects, leading to substantial value creation and benefits for
shareholders, customers and employees.
The Banks have the financial and management resources to invest in and grow ABN
AMRO's businesses and have proven records of growing their own businesses.
Implementation of the Banks' respective measures to realise projected synergies
is expected to enhance profitability and allow the Banks to invest further in
customer-facing areas, as they have done in their own businesses. The Banks
together expect to deliver benefits for ABN AMRO stakeholders which they believe
no single buyer of ABN AMRO could match.
The Banks believe that, because of their collective presence in and
understanding of the broad range of markets in which ABN AMRO operates, and
because of their proven track records of successful acquisitions and delivery of
promised results, their acquisition of ABN AMRO will have lower integration risk
than its acquisition by a single buyer.
2. Banks confirm the terms of their proposed Offer
The Banks confirm today the terms of their proposed Offer for ABN AMRO. The
Banks are convinced that the proposed Offer provides the best outcome for
shareholders, employees and other stakeholders of ABN AMRO and would prefer to
secure a recommendation by the Boards of ABN AMRO.
The Banks would therefore still welcome the opportunity of agreeing with ABN
AMRO and Bank of America a way forward that meets the interests of shareholders,
employees and other stakeholders of all parties.
The Banks intend to offer, through their acquisition vehicle RFS Holdings, for
each ABN AMRO Share (subject to the pre-conditions set out in Appendix II):
€38.40 per ABN AMRO Share, 13.7% above the value of Barclays' proposed offer (1)
Comprising €30.40 in cash plus 0.844 New RBS Shares
Of the proposed Offer amount, €1.00 in cash will be deferred pending resolution
of the LaSalle Situation. Further details of this Contingent Consideration are
set out in Section 8 below.
Approximately 79% of the proposed Offer consideration will be payable in cash.
(1) Based on the price of Barclays ordinary shares of 712.5p at the close of
business on 24 April 2007, the day before the Banks first announced details of
their proposals including a price indication, and on the price of RBS Shares of
642.5p at the close of business on 25 May 2007
The pre-conditions to the proposed Offer include that the Dutch Supreme Court
upholds the preliminary ruling of the Dutch Enterprise Chamber that the
consummation of the Bank of America Agreement must be approved by ABN AMRO
shareholders by the requisite vote at the ABN AMRO EGM. In these circumstances,
the proposed Offer will then be conditional upon ABN AMRO shareholders having
failed to approve the Bank of America Agreement at that meeting. This is further
discussed in Section 8 below. The pre-conditions to the proposed Offer are set
out in Appendix II.
The Banks' proposed Offer will not be subject to any financing condition or to
the disposal of any businesses by any Bank including the ABN AMRO businesses
being acquired. On the basis of and subject to the terms and conditions of
agreements entered into with each of the Banks, Merrill Lynch, together with
certain other major international financial institutions, has undertaken to
underwrite the following issues of securities by each of the Banks.
Fortis intends to raise €15 billion of new equity financing via a rights issue
and up to €5 billion of new Tier 1 capital, and to release up to €8 billion of
capital. (2) Under the terms of the proposed Offer, RBS would issue New RBS
Shares with an aggregate value of approximately €15 billion to ABN AMRO
shareholders. RBS also intends to raise approximately €6 billion of new
non-dilutive Tier 1 capital and to finance the remainder of its share of the
consideration through internal resources. Santander intends to raise
approximately €9.5-10 billion of new equity financing via a rights issue and
mandatorily convertible instruments, amounting to approximately half of its
share of the consideration, and to finance the remainder through balance sheet
optimisation, including leverage, incremental securitisation and asset
disposals.
(2) Including sale of non-core assets, securitisation and other similar
transactions
Further information about the proposed Offer, including the terms and conditions
to which it is subject, can be found in the Appendices to this announcement. In
particular, a summary of the financing for the proposed Offer can be found in
Appendix I and further information is included in the separate announcements
issued by the Banks today. Further details of the New RBS Shares and the
treatment of ABN AMRO's Convertible Financing Preference Shares, Formerly
Convertible Preference Shares and Options can also be found in Appendix I.
3. Orderly business reorganisation resulting in stronger businesses
The Banks have entered into an agreement which relates to the proposed Offer for
ABN AMRO, their shareholdings in RFS Holdings and the planned reorganisation of
ABN AMRO.
RBS will lead the Banks' orderly reorganisation of ABN AMRO and assume the lead
responsibility for ensuring that ABN AMRO is managed in compliance with all
applicable regulatory requirements from completion of the proposed Offer.
Objective of reorganisation
The objective of the orderly reorganisation following completion of the proposed
Offer will be to result in the following ownership:
- Fortis: Business Unit Netherlands (excluding former Dutch wholesale
clients, Interbank and DMC Consumer Finance), Business Unit Private Clients
globally, Business Unit Asset Management globally
- RBS: Business Unit North America including LaSalle, Business Unit
Global Clients and wholesale clients in the Netherlands (including former Dutch
wholesale clients) and Latin America (excluding Brazil), Business Unit Asia
(excluding Saudi Hollandi) and Business Unit Europe (excluding Antonveneta)
- Santander: Business Unit Latin America (excluding wholesale clients
outside Brazil), Antonveneta, Interbank and DMC Consumer Finance
- Shared Assets: Head Office and central functions, private equity
portfolio, stakes in Capitalia and Saudi Hollandi, and Prime Bank
Consideration to be paid and estimated profit
The following table sets out the share of the consideration to be provided by
each Bank and the estimated 2006 profit before tax attributable to the
businesses being acquired.
Consideration* Share of Profit before tax**
consideration
Fortis €24.0bn 33.8% €1.68bn
RBS €27.2bn 38.3% €1.72bn
Santander €19.9bn 27.9% €1.55bn
Total €71.1bn 100.0% €4.95bn
* Based on undiluted number of shares, as set out in Appendix IV.
** Excludes €0.05 billion of profit before tax relating to central functions and shared
assets. These estimates are based on the 2006 Annual Report & Accounts of ABN AMRO adjusted
for certain restructuring costs and other one-off or non-recurring items and on the estimates
of the Banks. As the reorganisation of the ABN AMRO Group as set out above does not
correspond precisely to the Business Unit definitions in ABN AMRO's 2006 Annual Report &
Accounts, these estimates are not audited and may not be accurate. Any inaccuracies may, in
limited circumstances, following completion of the proposed Offer, be addressed in accordance
with the terms of the arrangements between the Banks, but will not affect the terms of the
proposed Offer. Further details on the calculation of these figures are set out in Appendix
IV.
Management and reorganisation
Immediately upon completion of the proposed Offer, ABN AMRO will become a
subsidiary undertaking of RBS, owned jointly by the Banks through RFS Holdings.
Immediately following completion, the structure and operation of ABN AMRO will
remain unchanged. A limited number of senior appointments will be made by the
Banks to the Managing Board and the Group Business Committee. The Banks'
immediate priority will be to ensure that the organisation continues to provide
high quality service to its customers and to meet all regulatory requirements.
During the first 45 days after completion of the proposed Offer, the Banks will
work with the management of ABN AMRO to verify and expand the information
received from, and assumptions made on the basis of, the limited due diligence
access granted before completion. Within 45 days of completion of the proposed
Offer, the Banks intend to have validated a base-lined plan for the achievement
of synergies and for the separation and transfer of the ABN AMRO businesses to
the respective Banks. This plan will form the basis for continued consultation
with employee bodies and regulators with whom there have already been extensive
discussions as part of an ongoing process. Implementation of the plan will begin
only when the necessary approvals have been received.
The Banks intend that, as an interim step towards the separation of the ABN AMRO
businesses, ABN AMRO will be reorganised into three units containing the
businesses that will ultimately be transferred to the respective Banks. A fourth
unit will contain shared assets regarded as non-strategic.
Thereafter, as soon as reasonably practicable, certain businesses which can
readily be separated will be legally transferred to the respective Banks. Fortis
and RBS will work together to separate the Netherlands retail and commercial
banking operations from the global wholesale banking operations. The former will
be transferred to Fortis while the latter will be owned by RBS. The separation
and transfer of businesses will be subject to regulatory approval and
appropriate consultation processes with employees, employee representatives and
other stakeholders.
IT systems will in general be separated and transferred with the businesses they
support. However, the Banks will take advantage of opportunities to create
greater economic value by sharing platforms.
During the reorganisation, the Banks will retain a shared economic interest in
all central functions (including Head Office functions) that provide support to
ABN AMRO Group businesses. The Banks will also retain shared economic interests
in certain assets and liabilities of ABN AMRO which the Banks regard as
non-strategic. These include ABN AMRO's private equity portfolio, its stakes in
Capitalia and Saudi Hollandi, and Prime Bank. These are expected to be disposed
of over a period of time with a view to maximising value.
The Banks believe that the structure they intend to implement following
completion of the proposed Offer will strengthen the ABN AMRO businesses and not
expose them, their capital or their customers to any additional risk.
The Banks believe that holders of ABN AMRO's debt securities will, in general,
benefit from the expected positive impact of the transaction on ABN AMRO's
credit profile.
At the outset, the entire portfolio of ABN AMRO derivative transactions will be
managed to ensure that all the derivative risk management needs of the component
ABN AMRO businesses are satisfied. In time, there will be an orderly migration
of transactions to the appropriate trading entities in line with normal novation
or assignment processes. RBS, through its integration of NatWest, has
demonstrated its ability to successfully manage these processes.
Outcome of reorganisation
The reorganisation will allow each Bank to enhance the ABN AMRO businesses that
it acquires and achieve significantly strengthened positions in its markets,
leading to greater opportunities for growth in those markets. In summary:
Fortis:
- Creation of a top European financial institution with:
- More than 80,000 employees worldwide
- Total banking and insurance net profit of more than €5.5 billion
(among the top five in the Eurozone)
- 2,500 retail branches and 145 business centres across Europe
- Unique opportunity to strengthen Benelux core competencies:
- Creates a market leader, with more than 10 million customers in the
Benelux region alone
- Benelux #1 in retail and commercial banking
- Superior customer reach and skills in commercial banking, such as
leasing and factoring
- Capitalising on both ABN AMRO's and Fortis' brands in the Netherlands
- Extension of international wealth management growth engine:
- 3rd largest European private bank with more than €200 billion AUM
- One integrated network and a large European and Asian footprint
- A dedicated, broad and differentiated service offering for high net
worth and ultra high net worth clients
- Expansion of asset management growth platform:
- Top tier European asset manager with more than €300 billion AUM
globally
- Benefiting from a larger geographic footprint and enhanced offering
to third-party distributors
- The combined product range expected to reach top quartile position
across many asset classes and achieve scale in core growth products
RBS:
- Strengthens RBS's platform for growth outside UK
- Accelerates RBS's existing plans for growth in US and Asia
- RBS Global Banking & Markets and ABN AMRO Global Wholesale Businesses:
- Leading corporate and institutional banking and markets business,
with global reach and capability
- Well diversified by customer, product and geography
- Complementary product strengths and customer franchises
- Top 5 across broad range of corporate banking products
- Benefits from cash management and trade finance platform
- #1 in UK and Europe, #5 in US and Asia (excluding Japan), by client
numbers
- Citizens and LaSalle:
- Complementary retail and commercial businesses
- Enhanced distribution of Global Banking & Markets products in US
- Excellent geographic fit in large and attractive market
- RBS America 5th largest banking business in US by assets
- RBS and ABN AMRO International Retail Businesses in Asia and Middle
East:
- Enhanced and extended opportunities for growth, particularly in
credit cards and affluent banking
Santander:
- Brazil:
- Creates a top 3 bank by network and loans, benefiting from enhanced
economies of scale
- High geographical and product complementarity between both franchises
(Banco Real and Santander Banespa)
- High degree of value creation through in-market synergies
- Low integration risk; Santander Banespa's fully scaleable IT system
is prepared for the migration of Banco Real
- Italy:
- Antonveneta is a strong franchise in an attractive market
- Efficiency improvements from the migration to Partenon, Santander's
proprietary IT system
- Potential to improve commercial performance (e.g. mortgage lending,
consumer finance, retail mutual funds)
- Good platform from which to grow organically
- Interbank and DMC (consumer finance in the Netherlands):
- Full integration into Santander Consumer Finance, which is already
present in 14 European countries including the Netherlands
4. Expected benefits for customers and employees
The Banks expect that the stronger businesses created by combining ABN AMRO's
businesses with their own complementary operations will generate benefits for
customers. The enhanced presence, product strengths and distribution
capabilities of these strengthened businesses are expected to deliver benefits
to customers, who will also gain from the increased scale and efficiency of the
businesses that serve them. The business reorganisation will be handled in an
orderly fashion designed to ensure continuity of customer service. A key
principle of the implementation plan agreed among the Banks is that there should
be minimal disruption to customer-facing activities.
The Banks believe that the stronger businesses resulting from the transaction
will also create sustainable platforms for increased job creation and enhanced
opportunities for employees. The Banks' track records in this regard are
excellent, demonstrating organic growth in employment built on strong business
foundations.
The realisation of the expected transaction benefits will entail some initial
reduction in staff, not all of which will be in ABN AMRO. The Banks have no
plans, however, to increase the number of off-shored jobs significantly. As a
result, the Banks expect that fewer employees will be affected than under the
Barclays proposal.
The Banks intend to retain the best talent through a fair appointment process
based on merit and competencies. The Banks are committed to continue working
with works councils, trade unions and other representative bodies to agree the
most constructive approach. Existing Social Plans and Collective Labour
Agreements will be honoured.
The Banks also intend to create significant numbers of new positions in the
Netherlands, through investment in a number of significant businesses. Within
the Netherlands and other appropriate territories, an employment office will be
created to identify redeployment opportunities for staff across the operations
of the Banks. The Banks' firm intention is that any job losses in the
Netherlands will be accommodated through natural turnover, redeployment and
voluntary redundancy.
5. Banks expected to generate substantial transaction benefits
The Banks believe that the inclusion within their groups of ABN AMRO's
businesses will create substantial value for shareholders through cost savings
and revenue benefits.
In 2006, ABN AMRO's cost:income ratio was 69.6%, compared to 61.2% for Fortis
Bank, 42.1% for RBS and 48.5% for Santander. The Banks believe that the
combinations of complementary and overlapping businesses will enable substantial
de-duplication cost savings.
In aggregate, it is expected that cost savings will reach approximately €4.23
billion by the end of 2010. The cost savings expected to be achieved by each
Bank and the anticipated integration costs are as follows:
Cost savings per annum Integration costs
Fortis €1.15bn €1.54bn
RBS €2.01bn €3.84bn
Santander €0.86bn €1.00bn
Shared Assets €0.21bn €0.43bn
Total €4.23bn €6.81bn
Whilst the clear cost-saving opportunities underpin the potential value
creation, the Banks also believe that there are considerable opportunities for
them to create sustainable increases in profitable revenue growth.
The Banks believe that limited scale and resources, combined with a lack of
focus, have made it difficult for ABN AMRO to take advantage of the many growth
opportunities across its broad range of attractive but widely-spread franchises,
products and geographies. The combination of complementary businesses and
capabilities will create additional opportunities for growth which are not
available to ABN AMRO alone, or to any single buyer. The Banks have the
resources to capitalise on these opportunities for growth.
It is estimated that the aggregate revenue benefits identified by the Banks, net
of associated costs and bad debts, before tax, will be approximately €1.22
billion by the end of 2010, split as follows:
Profit from revenue benefits per
annum
Fortis €0.19bn
RBS €0.85bn
Santander €0.18bn
Total €1.22bn
The details of the anticipated cost savings and revenue benefits as they apply
to each of the businesses to be acquired by the Banks are set out in each Bank's
separate announcement.
The figures set out above are preliminary and are based on assumptions the Banks
believe to be conservative.
6. Banks' extensive experience and proven track records reduce integration
risk
The Banks, collectively, have extensive experience in, and understanding of, ABN
AMRO's major businesses and geographies. By concentrating on their respective
areas of expertise and by dividing the integration tasks among themselves, the
Banks expect to reduce significantly overall integration risk relative to a
single buyer with limited experience across ABN AMRO's activities and a limited
track record in large scale integrations.
Each of the Banks has a strong track record of successful integrations of
acquired businesses, including delivery of promised transaction benefits.
Benefits promised and delivered in the Banks' previous largest transactions are
set out below:
Transaction Total promised Total delivered
Fortis Generale Bank €675m €861m (+28%)
RBS NatWest £1,420m £2,030m (+43%)
Santander Abbey National €300m* €425m (+42%)
* Promised by end of second year after completion of the transaction
In the acquisition of ABN AMRO by the Banks, the Banks believe their projected
synergies are based on achievable objectives. Most of the estimated transaction
benefits are expected to result from cost savings which are based on
conservative estimates that are in line with past achievements. The Banks expect
that a substantial proportion of the cost savings estimated by the Banks will
result from de-duplication of overlapping activities. They are not dependent on
aspirations to achieve top quartile cost:income ratios or on a substantial
off-shoring of functions.
7. Value and EPS enhancing for the Banks
Fortis
Allowing for the acquisition of the relevant ABN AMRO businesses, Fortis Bank's
Tier 1 capital ratio is expected to be close to 6.7% immediately after the
transaction.
Based on Fortis' forecasts for business growth and transaction benefits, the
acquisition is expected to lead to 4.3% (1) accretion in cash earnings per share
in 2010 and to produce a return on investment on a cash basis of 11.2% (2) in
2010.
(1) Adjusted for purchased intangibles amortisation
(2) Return on investment defined as profit after tax plus post-tax transaction
benefits over consideration plus post-tax integration costs. Adjusted for
purchased intangibles amortisation
RBS
Allowing for the acquisition of the relevant ABN AMRO businesses, RBS's Tier 1
capital ratio is expected to be approximately 7.2% (3) at the end of 2007.
Based on RBS's forecasts for business growth and transaction benefits, the
acquisition is expected to lead to 7.3% (4) accretion in adjusted earnings per
share in 2010 and to produce a return on investment of 13.5% (5) in 2010.
(3) On a pro forma proportional consolidated basis Tier 1 ratio is 7.1%
(4) Adjusted for purchased intangibles amortisation and integration costs
(5) Return on investment defined as profit after tax plus post-tax transaction
benefits over consideration plus post-tax integration costs. Adjusted for
purchased intangibles amortisation
Santander
Allowing for the acquisition of the relevant ABN AMRO businesses, Santander's
Tier 1 capital ratio is expected to be in excess of 7% at the end of 2007,
assuming that there is a full consolidation of acquired businesses by end 2007.
Based on Santander's forecasts for business growth and transaction benefits, the
acquisition is expected to lead to 5.3% accretion in earnings per share in 2010
and to produce a return on investment of 12.7% (6) in 2010.
(6) Expected 2010 earnings (including synergies) divided by consideration for
ABN AMRO businesses plus NPV of amortisation of Antonveneta acquired intangibles
8. LaSalle
The pre-conditions to the proposed Offer include that the Dutch Supreme Court
upholds the preliminary ruling of the Dutch Enterprise Chamber to the effect
that the consummation of the Bank of America Agreement must be approved by ABN
AMRO shareholders by the requisite vote at the ABN AMRO EGM. In these
circumstances, the proposed Offer will then be conditional upon ABN AMRO
shareholders having failed to approve the Bank of America Agreement at that
meeting.
Given that the Banks cannot be sure of the timing of the Dutch Supreme Court
ruling or of the ABN AMRO EGM (for example, the ABN AMRO EGM could be held
before the Dutch Supreme Court has made its ruling), the ABN AMRO EGM vote is
also a pre-condition to the proposed Offer. The Banks also reserve the right to
make their proposed Offer conditional on the Dutch Supreme Court upholding the
preliminary ruling of the Dutch Enterprise Chamber if the Banks wish to make the
proposed Offer and post Offer documentation to ABN AMRO shareholders before the
Dutch Supreme Court has issued its decision.
The pre-conditions and conditions to the proposed Offer are set out in
Appendices II and III respectively.
The Banks have held amicable discussions with Bank of America. These have not
resulted in agreement. The Banks would still welcome the opportunity of agreeing
with ABN AMRO and Bank of America a way forward that meets the interests of
shareholders, employees and other stakeholders of all parties.
However, in light of the uncertainty surrounding the LaSalle Situation, payment
of €1.00 of the cash consideration offered in respect of each ABN AMRO Share
will be deferred (the "Contingent Consideration").
From the Contingent Consideration will be deducted 95% of all costs (including
damages) incurred by the Banks, ABN AMRO, or any of their respective affiliates
associated with or resulting from settling, paying damages relating to, or
insuring against, the LaSalle Situation, or otherwise in connection with any
agreement with Bank of America. The Contingent Consideration, less such
deductions, plus (from completion of the proposed Offer and subject to any
required regulatory approval) interest on the balance less deductions, will be
paid following a final and binding settlement of, or a final non-appealable
court judgement in relation to, the LaSalle Situation, or following the
outstanding issues with Bank of America being resolved. The Contingent
Consideration will be paid in cash to ABN AMRO shareholders whose shares are
exchanged in the proposed Offer. However, if the total of such deductions is
greater than or equal to the Contingent Consideration, no Contingent
Consideration will be paid, and any costs exceeding the Contingent Consideration
will be borne by the Banks.
If the LaSalle Situation is still outstanding following completion of the
proposed Offer, and depending on the Banks' assessment of the situation at the
time, the Banks reserve the right to continue with the sale of LaSalle to Bank
of America on the terms of the Bank of America Agreement. In this unlikely
situation, the Contingent Consideration would not be paid to ABN AMRO
shareholders.
Further details of the Contingent Consideration will be set out in the Offer
documentation.
In light of the protections set out above, the Banks acknowledge that litigation
and material adverse change conditions to the proposed Offer cannot be invoked
in respect of the LaSalle Situation.
If the Dutch Supreme Court, or any final court decision, fails to uphold, or
otherwise reach the same conclusion as, the preliminary ruling of the Dutch
Enterprise Chamber that the consummation of the Bank of America Agreement
requires ABN AMRO shareholder approval or if ABN AMRO shareholders approve the
Bank of America Agreement at the ABN AMRO EGM, the Banks' proposed Offer will
not proceed (unless these conditions or pre-conditions are waived). However, the
Banks reserve the right to make a new offer for ABN AMRO (excluding LaSalle) in
these circumstances. Notwithstanding the foregoing, no decision has been made in
this regard and there can be no certainty that any new offer would be made at
all or, if made, there can be no certainty as to the financial and other terms
and conditions of such offer.
9. Regulatory process
RBS will take the lead responsibility for ensuring that ABN AMRO is managed in
compliance with applicable regulatory requirements. Fortis and Santander will
support RBS with relevant specialist expertise whenever appropriate.
The stability of the financial system is of paramount concern to each of the
Banks and they have the utmost confidence that the system will be strengthened
as a result of the proposed transaction.
On completion of the proposed Offer, ABN AMRO will initially remain structurally
unchanged. A limited number of senior appointments are to be made as soon as
practicable by the Banks to the Managing Board and the Group Business Committee.
During the first 45 days after completion of the proposed Offer, the Banks will
work with the management of ABN AMRO to verify and expand the information
received from and assumptions made on the basis of the limited due diligence
access granted before completion. Within 45 days of completion of the proposed
Offer, the Banks intend to have validated a base-lined plan for the achievement
of synergies and for the separation and transfer of the ABN AMRO businesses to
the respective Banks. This plan will form the basis for consultation with
employee bodies and regulators. Implementation of the plan will begin only when
the necessary approvals have been received.
The Banks firmly believe that they can satisfy the requirements of the
regulators, as they have been able to do in all of their previous acquisitions.
DNB, the FSA, the BFIC, the Bank of Spain, the AFM, Euronext Amsterdam and the
Social-Economic Council (Sociaal-Economische Raad) have been informed of the
Banks' proposals.
The Banks will seek to obtain all necessary regulatory and competition approvals
and clearances and will undertake all requisite employee consultation and
information processes as soon as practicable. Accordingly, clearance for the
proposed Offer will be sought from the Dutch Ministry of Finance and relevant
central banks.
The Banks have discussed the proposed transaction with regulatory authorities in
their respective home markets including Belgium, the Netherlands, Spain and the
UK. In addition, the Banks have identified change of control notifications or
approvals in a number of jurisdictions.
10. Process and next steps
Offer documentation to ABN AMRO shareholders will be published as soon as
practicable following the satisfaction or waiver of the pre-conditions to the
proposed Offer set out in Appendix II.
When made, completion of the proposed Offer will be subject to the satisfaction
or waiver of certain proposed Offer conditions customary for transactions of
this type and certain other proposed Offer conditions including those summarised
in Appendix III.
If the proposed Offer is declared unconditional and completed, depending on the
number of ABN AMRO Shares tendered and purchased in the proposed Offer, the
Banks intend to acquire the ABN AMRO Shares they do not own after completion of
the proposed Offer, either by initiating the squeeze-out procedures permitted by
applicable law, effecting a legal merger or in any other manner permitted by
law. In addition, it is intended that ABN AMRO's listings of ordinary shares and
Formerly Convertible Preference Shares on Eurolist by Euronext Amsterdam N.V.,
and of the ABN AMRO ADSs on the NYSE, will be terminated. Finally, provided the
relevant conditions are satisfied, the Banks will procure that ABN AMRO
deregisters and terminates its reporting and other obligations under the US
Securities Exchange Act of 1934, as amended.
Next Steps
It is currently expected that amongst others the following will be achieved
during July / August of 2007 (reviewing authority in brackets):
- Publication and filing of the Offer document (including AFM and SEC)
- Filing of the US registration statement for the issuance of the New RBS
Shares pursuant to the Offer (SEC)
- Publication of the prospectus by RBS for the issue of New RBS Shares
(FSA)
- Publication of prospectuses by Fortis and Santander in connection with
their respective planned equity issuances (CBFA, AFM and Banco de Espana,
respectively)
- Publication of shareholder circulars by RBS and Fortis in connection
with shareholder approval of the transaction and for Fortis also to approve the
equity issue (FSA, CBFA and AFM, respectively)
- Equity fundraisings by Fortis and Santander
It is currently expected that Extraordinary General Meetings of shareholders of
the Banks in connection with the transaction will be held in July / August of
2007. In addition there will be one or more Extraordinary General Meetings of
ABN AMRO shareholders in connection with the transaction.
The Banks are working towards and currently expect commencement of the Offer on
or before 13 August 2007, subject to satisfaction of the pre-conditions to the
proposed Offer. (1) It is currently expected that completion of the Offer will
be achieved in the fourth quarter of 2007.
(1) Consequently, an extension of the 6 weeks period referred to in article 9g
(3) of the Decree, which would otherwise end on 10 July 2007, is required. The
AFM has agreed to grant the Banks such an extension. The period of the extension
shall be set by the AFM after consultation with the Banks in the week of 2 July
2007 taking into account the relevant circumstances then prevailing in respect
of the proposed Offer including the progress made with the approval processes of
the Offer documentation (as specified above). The extension granted will be
disclosed by the Banks in an announcement on the date of the extension in the
week of 2 July 2007.
The Banks will make a further statement in or before the week of 2 July 2007
providing a further timetable for the proposed Offer.
The order and timing of the events above are illustrative only and may be
subject to change.
Investor and Analyst Information
PRESENTATION TO ANALYSTS AND INVESTORS
A meeting for analysts and institutional investors will be hosted by Jean-Paul
Votron, Fortis Chief Executive, Sir Fred Goodwin, RBS Group Chief Executive and
Alfredo Saenz, Santander Chief Executive.
- Venue: 280 Bishopsgate, London, EC2M 4RB
- Date & Time: 29 May 2007 8.30am - 10.15am (BST) (9.30am - 11.15am
(CET)) for a prompt start. Registration will commence at 8.00am
Please note, as seating is limited, it may be necessary to restrict the number
of attendees from each institution.
- Slide presentation packs will be available on the Banks' websites
shortly
If you are unable to attend the meeting in person, you can listen through any of
the following options:
- A live webcast of the event available on:
- www.emincote.com/consortium001/default.asp
- Details will also be available on the Banks' websites
- www.rbs.com
- www.fortis.com
- www.santander.com
- A live conference call by dialling:
- UK Toll: +44 207 138 0811
- UK Toll free: 0800 028 7847
- US Toll: +1 718 354 1193
- US Toll free: 1888 893 9532
- Spain Toll: +34 914 533 434
- Spain Toll free: 800 099 465
- Netherlands Toll: +31 20 713 2789
- Netherlands Toll free: 0800 026 0068
- There will be a replay facility on the investor presentation. This can
be accessed by dialling:
- UK Toll: +44 207 806 1970
- UK Toll free: 0800 559 3271
- US Toll: +1 718 354 1112
- US Toll free: 1 866 883 4489
- Spain Toll: +34 917 889 869
- Netherlands Toll: +31 20 713 2791
- Netherlands Toll free: 0800 027 0028
- Passcode for replay:
- English: 4945328#
- Spanish: 3089460#
The webcast provides an opportunity to listen remotely to the live presentation.
You may join in the Q&A presentation by using the live conference call.
Press Information
PRESS CONFERENCE
The Banks will hold a press conference for members of the media in London.
The press conference will be hosted by Jean-Paul Votron, Fortis Chief Executive,
Sir Fred Goodwin, RBS Group Chief Executive and Alfredo Saenz, Santander Chief
Executive.
The details of the press conference are as follows:
- London Venue: 280 Bishopsgate, London, EC2M 4RB
- Date & Time: 29 May 2007 2.00pm - 3.00pm (BST) (3.00pm - 4.00pm (CET))
If you are unable to attend the meeting in person, you can listen through any of
the following options:
- A live webcast of the event available on:
- www.emincote.com/consortium001/default.asp
- Details will also be available on the Banks' websites
- www.rbs.com
- www.fortis.com
- www.santander.com
- A live conference call by dialling:
- UK Toll: +44 207 138 0811
- UK Toll free: 0800 028 7847
- US Toll: +1 718 354 1193
- US Toll free: 1888 893 9532
- Spain Toll: +34 914 533 434
- Spain Toll free: 800 099 465
- Netherlands Toll: +31 20 713 2789
- Netherlands Toll free: 0800 026 0068
- A live video conference for journalists in Madrid.
- Please call +34 289 5221 for information
- There will be a replay facility on the media call. This can be accessed
by dialling:
- UK Toll: +44 207 806 1970
- UK Toll free: 0800 559 3271
- US Toll: +1 718 354 1112
- US Toll free: 1 866 883 4489
- Spain Toll: +34 917 889 869
- Netherlands Toll: +31 20 713 2791
- Netherlands Toll free: 0800 027 0028
- Passcode for replay:
- English: 4270111#
- Spanish: 9849777#
- The webcast provides an opportunity to listen remotely to the live
presentation. You may join in the Q&A presentation by using the live conference
call.
- Broadcast media who wish to access live transmission for the press
conference should contact the respective press offices or email
mediarelations@rbs.co.uk for details.
- Time constraints in the schedule will restrict the availability of the
Principals for broadcast interviews. Broadcast media who wish to request an
interview should contact the respective press offices or email
mediarelations@rbs.co.uk. Satellite links and ISDN lines are available for
broadcast interviews.
- For logistical reasons, no camera teams or photographers will be
allowed in the conference rooms.
Important Information
This announcement is an announcement as defined in article 9g(1) a in fine of
the Decree. In connection with the proposed Offer, RBS expects to file with the
SEC a Registration Statement on Form F-4, which will constitute a prospectus,
and the Banks expect to file with the SEC a Tender Offer Statement on Schedule
TO and other relevant materials. INVESTORS ARE URGED TO READ ANY DOCUMENTS
REGARDING THE PROPOSED OFFER IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a copy of
such documents, without charge, at the SEC's website (http://www.sec.gov) once
such documents are filed with the SEC. Copies of such documents may also be
obtained from each Bank, without charge, once they are filed with the SEC.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. This press release is not an offer of securities for sale into the
United States. No offering of securities shall be made in the United States
except pursuant to registration under the US Securities Act of 1933, as amended,
or an exemption therefrom.
Forward-Looking Statements
This announcement includes certain "forward-looking statements". These
statements are based on the current expectations of the Banks and are naturally
subject to uncertainty and changes in certain circumstances. Forward-looking
statements include any statements related to the benefits or synergies resulting
from a transaction with ABN AMRO and, without limitation, statements typically
containing words such as "intends", "expects", "anticipates", "targets",
"plans", "estimates" and words of similar import. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking statements.
These factors include, but are not limited to, the presence of a competitive
offer for ABN AMRO, satisfaction of any pre-conditions or conditions to the
proposed Offer, including the receipt of required regulatory and anti-trust
approvals, the successful completion of the Offer or any subsequent compulsory
acquisition procedure, the anticipated benefits of the proposed Offer (including
anticipated synergies) not being realized, the separation and integration of ABN
AMRO and its assets among the Banks and the integration of such businesses and
assets by the Banks being materially delayed or more costly or difficult than
expected, as well as additional factors, such as changes in economic conditions,
changes in the regulatory environment, fluctuations in interest and exchange
rates, the outcome of litigation and government actions. Other unknown or
unpredictable factors could cause actual results to differ materially from those
in the forward-looking statements. None of the Banks undertake any obligation to
update publicly or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.
Other Information
Merrill Lynch International, which is authorised and regulated in the United
Kingdom by the FSA, is acting as financial adviser to Fortis, RBS and Santander
and as underwriter for Fortis, RBS and Santander, and is acting for no one else
in connection with the proposed Offer, and will not be responsible to anyone
other than Fortis, RBS and Santander for providing the protections afforded to
customers of Merrill Lynch International nor for providing advice to any other
person in relation to the proposed Offer.
Fortis Bank SA/NV, which is authorised and regulated in Belgium by the CBFA,
Greenhill & Co. International LLP, which is authorised and regulated in the
United Kingdom by the FSA, and Fox-Pitt, Kelton Ltd, which is authorised and
regulated in the United Kingdom by the FSA, are acting as financial advisers to
Fortis. Fortis Bank SA/NV, Greenhill & Co. International LLP and Fox-Pitt,
Kelton Ltd are acting for no one else in connection with the proposed Offer, and
will not be responsible to anyone other than Fortis for providing the
protections afforded to their respective customers nor for providing advice to
any other person in relation to the proposed Offer. Fortis Bank SA/NV and
Greenhill & Co. International LLP are acting as financial adviser in connection
with the transaction and Fox-Pitt, Kelton Ltd is acting as financial adviser in
connection with the financing of the transaction.
The Royal Bank of Scotland plc, which is authorised and regulated in the United
Kingdom by the FSA, is acting as financial adviser to RBS and is acting for no
one else in connection with the proposed Offer, and will not be responsible to
anyone other than RBS for providing the protections afforded to customers of The
Royal Bank of Scotland plc nor for providing advice to any other person in
relation to the proposed Offer.
Santander Investment, S.A., which is authorised and regulated in Spain by the
Banco de Espana and the Comision Nacional del Mercado de Valores, is acting as
financial adviser to Santander and is acting for no one else in connection with
the proposed Offer, and will not be responsible to anyone other than Santander
for providing the protections afforded to customers of Santander Investment,
S.A. nor for providing advice to any other person in relation to the proposed
Offer.
NIBC Bank N.V., which is authorised and regulated in the Netherlands by the AFM
and DNB, is acting as financial adviser to Santander and is acting for no one
else in connection with the proposed Offer, and will not be responsible to
anyone other than Santander for providing the protections afforded to customers
of NIBC Bank N.V. nor for providing advice to any other person in relation to
the proposed Offer.
Any Offer made in or into the United States will only be made by the Banks and/
or RFS Holdings directly or by a dealer-manager that is registered with the SEC.
APPENDIX I
OTHER PROPOSED OFFER DETAILS
Further information on the terms of the proposed Offer
ABN AMRO shareholders are expected to be entitled to receive and retain the ABN
AMRO interim dividend in respect of 2007 (expected to be paid on 27 August
2007).
The terms of the proposed Offer exclude the ABN AMRO 2007 interim dividend which
has been assumed to be €0.55 per ABN AMRO Share. If the actual ABN AMRO 2007
interim dividend differs from this assumption, the Banks reserve the right, at
their discretion, to make an appropriate adjustment to the terms of the proposed
Offer. The Offer consideration will be reduced to reflect the gross effect of
any dividends (other than the ABN AMRO 2007 interim dividend up to €0.55),
distributions (including, inter alia, shareholders' meetings attendance
premiums), share splits, share dividends or analogous transactions effective
from the date hereof until the date on which tendered ABN AMRO Shares are
accepted for exchange (both dates included).
Financing of the proposed Offer
Under the terms of the proposed Offer, RBS intends to issue New RBS Shares to
ABN AMRO shareholders and holders of ABN AMRO ADSs and to provide a portion of
the cash consideration. Fortis and Santander intend to issue equity to raise
cash which will be used, together with cash from other sources, to satisfy their
respective portions of the consideration payable to ABN AMRO shareholders and
holders of ABN AMRO ADSs under the terms of the proposed Offer. All three banks
intend to issue Tier 1 capital instruments to raise cash.
The Banks' proposed Offer will not be subject to any financing condition or to
the disposal of any businesses by any Bank including the ABN AMRO businesses
being acquired. On the basis of and subject to the terms and conditions of
agreements entered into with each of the Banks, Merrill Lynch, together with
certain other major international financial institutions, has undertaken to
underwrite the following issues of securities by each of the Banks.
Fortis intends to raise €15 billion of new equity financing via a rights issue
and up to €5 billion of new Tier 1 capital, and to release up to €8 billion of
capital. Under the terms of the proposed Offer, RBS would issue New RBS Shares
with an aggregate value of approximately €15 billion to ABN AMRO shareholders.
RBS also intends to raise approximately €6 billion of new non-dilutive Tier 1
capital and to finance the remainder of its share of the consideration through
internal resources. Santander intends to raise approximately €9.5-10 billion of
new equity financing via a rights issue and mandatorily convertible instruments,
amounting to approximately half of its share of the consideration, and to
finance the remainder through balance sheet optimisation, including leverage,
incremental securitisation and asset disposals.
New RBS Shares
Application will be made to the FSA for the New RBS Shares to be admitted to the
Official List and to the LSE for such shares to be admitted to trading on the
LSE's main market for listed securities.
It is expected that trading on the LSE will become effective and dealings, for
normal settlement, will begin shortly following the date on which it is
announced that all conditions to the proposed Offer have been satisfied or
waived.
The offer and sale of the New RBS Shares will be registered with the SEC. It is
expected that an application will be made to list the New RBS Shares, in the
form of ADSs, on the NYSE.
RBS Shares are only listed on the Official List. However, certain preference
shares of RBS are traded in the United States through a NYSE-listed ADR
programme, with The Bank of New York as the depositary and paying agent.
Further details on settlement, listing and dealing will be included in the Offer
documentation. The New RBS Shares will be issued credited as fully paid and will
rank pari passu in all respects with existing RBS ordinary shares and will be
entitled to all dividends and other distributions declared or paid by RBS by
reference to a record date on or after completion of the proposed Offer but not
otherwise. RBS intends to pay dividends semi-annually. It is expected that the
record date for the interim dividend declared by RBS in respect of 2007 will be
before completion of the proposed Offer.
Further details of the rights attaching to the New RBS Shares and a description
of any material differences between the rights attaching to those shares and the
ABN AMRO Shares will be set out in the Offer documentation.
Convertible preference shares
The Banks intend to make a proposal for all the depositary receipts representing
the issued and outstanding Convertible Financing Preference Shares consistent
with the terms of the prospectus dated August 31, 2004 relating to the
Convertible Financing Preference Shares.
A cash offer will be made for the issued and outstanding Formerly Convertible
Preference Shares of €26.50, the closing price on 25 May 2007. The aggregate
consideration payable for the Formerly Convertible Preference Shares will be in
the region of €1.2 million.
Options
If permissible under the applicable plans, holders of Options will be offered
the ability to exercise their Options and accept the proposed Offer.
RFS Holdings
It is intended that the proposed Offer will be made through RFS Holdings, a
company owned by the Banks and organised and existing under Dutch law. Each of
the Banks will have representation on the board of RFS Holdings. Under the terms
of the consortium agreement entered into by the Banks, RFS Holdings will be
funded by the Banks to settle the cash portion of the consideration and will
procure the issue to ABN AMRO shareholders by RBS of the New RBS Shares.
Option for shareholders to convert New RBS Shares into ADSs
Holders of ABN AMRO ADSs will be offered €30.40 cash plus 0.844 New RBS Shares
per ABN AMRO ADS under the terms of the proposed Offer, including €1.00 in cash
to be retained by the Banks pending resolution of the LaSalle Situation. RBS
intends to facilitate a custodial arrangement prior to completion of the
transaction which will allow former US holders of ABN AMRO Ordinary Shares and
former holders of ABN AMRO ADSs to hold and trade the New RBS Shares issued to
such holders. Under this arrangement, such shareholders will be able to elect to
convert their dividends into US dollars.
Prior to completion of the proposed Offer, RBS expects to establish an ADS
programme in the United States. US holders of ABN AMRO Ordinary Shares or
holders of ABN AMRO ADSs who receive New RBS Shares under the proposed Offer are
expected to be able to deposit such New RBS Shares in exchange for new RBS ADSs
on completing the necessary formalities. It is expected that an application will
be made to list the new RBS ADSs on the NYSE.
Persons who elect to exchange their New RBS Shares for RBS ADSs will be required
to pay stamp duty reserve tax and any other taxes or other costs associated with
the exchange of New RBS Shares for RBS ADSs.
Euronext listing
In addition, RBS intends to list the New RBS Shares on Eurolist by Euronext
Amsterdam N.V. If practicable, RBS will apply for such listing prior to the
completion of the proposed Offer.
APPENDIX II
PRE-CONDITIONS TO THE PROPOSED OFFER
- The preliminary ruling of the Dutch Enterprise Chamber that the
consummation of the Bank of America Agreement should be subject to ABN AMRO
shareholder approval has been upheld or otherwise remains in force, whether or
not pursuant to any decision of the Dutch Supreme Court, or of any other
judicial body, and ABN AMRO shareholders have failed to approve the Bank of
America Agreement by the requisite vote at the ABN AMRO EGM.
- There has been no material adverse change in respect of ABN AMRO,
Fortis, RBS or Santander (excluding any material adverse change resulting from
the LaSalle Situation).
- All necessary notifications, filings, submissions and applications
required to make the proposed Offer have been made and all authorisations and
relief required to make the proposed Offer have been obtained.
- All requisite employee consultations and information procedures with
trade unions and other employee representative bodies of Fortis and, insofar as
applicable, ABN AMRO have been completed.
The pre-conditions to the proposed Offer are for the benefit of the Banks and,
to the extent permitted, may be waived by the Banks (either in whole or in part)
at any time prior to the commencement of the proposed Offer. Notice of any such
waiver shall be given in the manner prescribed by applicable law.
APPENDIX III
PROPOSED OFFER CONDITIONS
- ABN AMRO shareholders have failed to approve the Bank of America
Agreement by the requisite vote at the ABN AMRO EGM convened for that purpose.
- At least 80% of the issued and outstanding ordinary shares of ABN AMRO
on a fully diluted basis have been tendered into the proposed Offer and not
withdrawn or are otherwise held by the Banks.
- There has been no material adverse change in respect of ABN AMRO,
Fortis, RBS or Santander (excluding any material adverse change resulting from
the LaSalle Situation).
- Other than the LaSalle Situation, no litigation or other legal,
governmental or regulatory proceedings or investigations by a third party
(including any regulatory body or governmental authority) have been instituted
or threatened or are continuing and no judgement, settlement, decree or other
agreement relating to litigation or other legal, governmental or regulatory
proceedings or investigations instituted by a third party (including any
regulatory body or governmental authority) shall be in effect which might,
individually or in aggregate, reasonably be expected to materially and adversely
affect ABN AMRO, RFS Holdings or any Bank or any of their respective affiliates.
- All necessary notifications, filings, submissions and applications in
connection with the proposed Offer have been made and all authorisations and
consents in connection with the proposed Offer have been obtained in a form
satisfactory to the Banks and all relevant waiting periods have expired and all
mandatory or appropriate regulatory and competition approvals, insofar as
required for settlement of the proposed Offer, of domestic and international
regulatory authorities have been obtained in a form satisfactory to the Banks.
- The registration statement on Form F-4 and any registration statement
on Form F-6 filed with the SEC in conjunction with the proposed Offer for
registration of the securities being offered under the proposed Offer has become
effective, no stop order has been issued or proceedings for suspension of its
effectiveness initiated by the SEC.
- No notification has been received by any of the Banks from their
respective home regulators that there is likely to be a material and adverse
change in the supervisory, reporting or regulatory capital arrangements that
will apply to ABN AMRO or any of the Banks.
- Confirmation has been obtained that the New RBS Shares will be admitted
to the Official List and admitted to trading on the LSE's main market for listed
securities.
- The general meetings of shareholders of the Banks have passed all
agreed or required resolutions.
- Other than entry into of the Purchase and Sale Agreement dated as of
April 22, 2007 between Bank of America and ABN AMRO Bank N.V. in respect of ABN
AMRO North America Holding Company, the holding company for LaSalle Bank
Corporation including the subsidiaries LaSalle Bank N.A. and LaSalle Bank
Midwest N.A., no member of the ABN AMRO Group has entered into, or completed any
transaction, involving the sale, repurchase, redemption or issue by ABN AMRO or
its affiliates to third parties of any shares in its own share capital (or
securities convertible or exchangeable into shares or options to subscribe for
any of the foregoing), or involving the sale of a material part of its business
or assets, and no member of the ABN AMRO Group has entered into, varied or
terminated any material contract outside the ordinary course of business or
given any undertaking to do any of the foregoing. ABN AMRO has also not approved
or declared any dividend nor has ABN AMRO made any payment of such dividend,
except in the normal course of business and consistent with past practice.
- All requisite employee consultations and information procedures with
trade unions and other employee representative bodies of Fortis and, insofar as
applicable, ABN AMRO have been completed.
The conditions to the proposed Offer are for the benefit of the Banks and, to
the extent permitted, may be waived by the Banks (either in whole or in part) at
any time prior to the expiration of the proposed Offer. Notice of any such
waiver shall be given in the manner prescribed by applicable law.
In order to enable the Banks to make the proposed Offer and post Offer
documentation before the Dutch Supreme Court, or any other relevant judicial
body, as the case may be, has issued its decision, the Banks reserve the right
to make their proposed Offer conditional on the preliminary ruling of the Dutch
Enterprise Chamber being upheld or otherwise remaining in force, or on a final
court decision having been taken that it is a legal requirement that the Bank of
America Agreement must be approved by ABN AMRO shareholders by the requisite
vote at the ABN AMRO EGM.
APPENDIX IV
SOURCES AND BASES
Save as otherwise stated, the following constitute the sources and bases of
certain information referred to in this announcement:
1. The values placed on the entire issued ordinary share capital of ABN
AMRO by the Banks' proposed Offer and Barclays' proposed offer are based on
1,852,448,094 ABN AMRO Ordinary Shares (as at 18 April 2007 and derived from the
announcement by ABN AMRO and Barclays on 23 April 2007) and on the price of
Barclays ordinary shares of 712.5p at the close of business on 24 April 2007,
the day before the Banks first announced details of their proposals including a
price indication, and on the price of RBS Shares of 642.5p at the close of
business on 25 May 2007.
2. The reference to significant and sustained future incremental earnings
growth for shareholders of the Banks is not intended, nor should it be
construed, as a profit forecast or be interpreted to mean that ABN AMRO's or the
Banks' respective earnings per share for the current or future financial years
will necessarily match or exceed the historical published respective earnings
per share of ABN AMRO or the Banks.
3. The exchange rate used in this announcement is €1.00:£0.6780 as
published in the Financial Times on 26 May 2007, or, where the context so
requires, €1.00:£0.6802 as published in the Financial Times on 25 April 2007.
4. The financial information relating to Fortis has been extracted from
its consolidated audited annual accounts for the years to which such information
relates and the interim and quarterly unaudited financial statements for the
relevant periods as published by Fortis, all of which are prepared in accordance
with IFRS.
5. The financial information relating to RBS has been extracted from its
consolidated audited annual accounts for the years to which such information
relates and the interim unaudited financial statements for the relevant periods
as published by RBS, all of which are prepared in accordance with IFRS.
6. The financial information relating to Santander has been extracted from
its consolidated audited annual accounts for the years to which such information
relates and the interim and quarterly unaudited financial statements for the
relevant periods as published by Santander, all of which are prepared in
accordance with IFRS.
7. The financial information relating to ABN AMRO has been extracted from
its consolidated audited annual accounts for the years to which such information
relates and the interim and quarterly unaudited financial statements for the
relevant periods as published by ABN AMRO for the relevant periods, all of which
are prepared in accordance with IFRS. None of the Banks accepts responsibility
for the accuracy or completeness of such information.
8. The total promised and delivered synergies in the Generale Bank
transaction are derived from the Fortis Investor Day Presentation published on 2
October 2003.
9. The total promised and delivered synergies in the acquisition of
NatWest by RBS are derived from the RBS 2002 annual results presentation.
10. The total promised and delivered synergies in the acquisition of Abbey by
Santander are derived from the announcement of the acquisition of Abbey National
plc by Santander published on 26 July 2004, and the Abbey Results Presentation
of 1 February 2007.
11. The profit before tax figures for the businesses being acquired by each of
the Banks under the proposed Offer, as set out on page 9, are based on estimates
prepared by the management of each of the Banks. In the preparation of these
estimates the Banks have taken account of the profit before tax reported for
each of ABN AMRO's divisions, as set out in ABN AMRO's 2006 Annual Report &
Accounts, and have made adjustments including but not limited to:
a. The figures have been taken from ABN AMRO's stated figures before
consolidation of private equity and excluding discontinued businesses.
b. The figures have been adjusted for certain restructuring costs and
other one-off or non-recurring items, as stated by ABN AMRO in its 2006 Annual
Report & Accounts and preliminary financial results for the 2006 financial year
(published on 8 February 2007).
c. The figures exclude purchase accounting adjustments relating to
Antonveneta, amounting to €(336) million before tax.
d. The figures have been adjusted to reflect certain of the differences
between the Business Unit ("BU") definitions in ABN AMRO's 2006 Annual Report
and Accounts and the planned division of ABN AMRO's businesses following
reorganisation. These adjustments include the Banks' estimates of the profit
before tax achieved by certain operations including the former Wholesale Clients
division (as defined by ABN AMRO in the 2005 Annual Report) operations within BU
Netherlands and Interbank. The Banks' estimates are not audited and may not be
accurate. The profit before tax figures have not been adjusted for certain other
such differences due to the unavailability of public information, including in
respect of profits derived from corporate clients within BU Latin America
excluding Brazil.
e. Adjustments to ABN AMRO's reported figures in respect of non-recurring,
non-operating and similar items have been made based on assumptions and
estimates made by the Banks. These estimates are not audited and may not be
accurate or comprehensive.
APPENDIX V
DEFINITIONS
The following definitions apply throughout this announcement unless the context
otherwise requires:
"ABN AMRO" ABN AMRO Holding N.V.
"ABN AMRO ADS" an American Depositary Share of ABN AMRO, evidenced by an
American depositary receipt, each representing one ABN AMRO
Ordinary Share
"ABN AMRO EGM" the extraordinary general meeting of ABN AMRO shareholders to
be convened for the purposes of considering the Bank of
America Agreement
"ABN AMRO Group" ABN AMRO and its subsidiaries and subsidiary undertakings
"ABN AMRO Ordinary Share" an ordinary share in the capital of ABN AMRO, nominal value €
0.56 per share (including such shares underlying ABN AMRO
ADSs)
"ABN AMRO Share" an ABN AMRO Ordinary Share or an ABN AMRO ADS
"ADR" an American Depositary Receipt
"ADS" an American Depositary Share evidenced by an American
depositary receipt
"AFM" The Netherlands Financial Markets Authority (Autoriteit
Financiele Markten)
"AUM" assets under management
"Bank of America" Bank of America Corporation
"Bank of America Agreement" the Purchase and Sale Agreement, dated as of April 22, 2007,
between Bank of America and ABN AMRO Bank N.V. in respect of
ABN AMRO North America Holding Company, the holding company
for LaSalle Bank Corporation, including the subsidiaries
LaSalle Bank N.A. and LaSalle Bank Midwest N.A., including any
amendment thereto
"Banks" Fortis, RBS and Santander
"Barclays" Barclays Bank plc
"BFIC" Banking, Finance and Insurance Commission (Belgium)
"Boards" the Supervisory and Managing Boards of ABN AMRO, unless
otherwise specified in the text
"CBFA" Commission Bancaire Financiere et des Assurances
"Citizens" Citizens Financial Group, Inc., a wholly-owned subsidiary of
RBS
"Convertible Financing Preference Shares" the convertible financing preference shares in the capital of
ABN AMRO with a nominal value of €0.56 each, which are
evidenced by depositary receipts
"Decree" Dutch Decree on the Supervision of the Securities Trade 1995
"DNB" De Nederlandsche Bank
"EPS" earnings per share
"Formerly Convertible Preference Shares" the (formerly convertible) preference shares in the capital of
ABN AMRO with a nominal value of €2.24 each
"Fortis" Fortis N.V. and Fortis SA/NV
"FSA" UK Financial Services Authority
"LaSalle" LaSalle Bank Corporation, a wholly-owned subsidiary of ABN
AMRO North America Holding Company, or, where the context so
requires, ABN AMRO North America Holding Company and its
subsidiaries from time to time
"LaSalle Situation" any proceedings, claims or actions asserted against ABN AMRO
(or any member of the ABN AMRO Group) by Bank of America or
any of its affiliates, in each case to the extent arising out
of or related to the Bank of America Agreement
"LSE" London Stock Exchange plc
"Merrill Lynch" Merrill Lynch International
"New RBS Shares" the new ordinary shares to be issued by RBS as part of the
consideration in the proposed Offer
"NYSE" the New York Stock Exchange operated by NYSE Group, Inc.
"Offer" the proposed offer to be made by RFS Holdings for all of the
issued and to be issued ABN AMRO Shares
"Official List" the Official List maintained by the FSA
"Options" the options or awards held under ABN AMRO share option schemes
entitling holders to receive ABN AMRO Shares
"RBS" The Royal Bank of Scotland Group plc
"RBS ADS" an American Depositary Share issued by RBS, evidenced by an
American depositary receipt, each representing such number of
RBS Shares as will be designated in the deposit agreement once
entered into.
"RBS Share" an ordinary share in the capital of RBS
"RFS Holdings" RFS Holdings B.V., a special purpose vehicle company
incorporated in the Netherlands through which the Banks will
make the proposed Offer
"Santander" Banco Santander Central Hispano, S.A.
"SEC" US Securities and Exchange Commission
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland and
its dependent territories
"UKLA" UK Listing Authority
"US" or "United States" the United States of America (including the states of the
United States and the District of Columbia), its possessions
and territories and all areas subject to its jurisdiction
END
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: 29 May 2007
| THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant) |
| By: | /s/ H Campbell |
| Name: Title: |
H Campbell Head of Group Secretariat |