Item
4. The Solicitation or Recommendation.
Explanation
of Dutch Law Context for US Investors
Under
Dutch law the ABN AMRO Managing Board and the Supervisory Board are obligated
to
take into account in their decision making not only the interests of
the
shareholders, but the interests of the company and all other stakeholders
as
well, including employees and customers. In its ruling of July 13,
2007 relating to ABN AMRO (see “—Background to the Proposed Offers” below) the
Dutch Supreme Court specifically and recently confirmed that this principle
applies to the current situation in which ABN AMRO finds itself:
“If
the
managing board abandons a stand alone-scenario and decides to pursue
a merger,
it shall, in the course of discharging its duties arising from the law
and the
articles of association, act in the interest of the company and its enterprise
and the management board shall take the interests of all stakeholders
(among
which the shareholders) into account in its decision-making
process.”
Dutch
law
furthermore requires the ABN AMRO Boards to disclose their reasoned opinion
(gemotiveerde standpuntbepaling) with respect to any merger or
takeover. The reasoned opinion must list the considerations including
the main pros and cons considered in reaching the opinion. The
opinion can contain a statement by the ABN AMRO Boards to support an
offer, not
to support an offer or can be neutral in view of the stakeholders’
interests. The reasoned opinion may include a recommendation to
shareholders to accept the offer, a non-recommendation or can be
neutral. There is no legal requirement that the boards recommend one
offer over another and the concept of a recommendation under Dutch law
is a
statement only to shareholders not to stakeholders. Although, any recommendation
is directed solely to shareholders, in reaching the decision to make
such
recommendation the interests of all stakeholders must be taken into account
by
the boards. A statement of support from a stakeholders' perspective
can be combined with a neutral position on whether shareholders should
from a
financial point of view accept the offer or not. Therefore, under
Dutch law, the boards may decide not to recommend an offer to shareholders
while
on the basis of a consideration of the stakeholder interests, it may
nevertheless support such an offer.
The
reasoned opinion (gemotiveerde standpuntbepaling) developed by the ABN
AMRO Boards at their meetings on July 26, 2007 and July 27, 2007, is
contained
below in “Reasons for the Recommendation”.
Recommendation
of the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board
The
ABN
AMRO Managing Board and the ABN AMRO Supervisory Board, in their respective
meetings on July 26 and 27, 2007, after having considered the advice
of outside
legal counsels and financial advisors, acting in good faith and observing
their
respective fiduciary duties, discussed the Consortium Offer and the Barclays
Offer, with a view to coming to a reasoned position on both offers, taking
into
account the best interest of ABN AMRO, its shareholders and other stakeholders,
in the context as further described in the statement contained in the
press
release issued on July 30, 2007 and reflected below (see “—Reasons for the
Recommendation”).
The
ABN AMRO Managing Board and the ABN AMRO Supervisory Board are not currently
in
a position to recommend either offer for acceptance to ABN AMRO’s
shareholders. ABN AMRO will further engage with both parties with the
aim of continuing to ensure a level playing field and minimizing any
of the
uncertainties currently associated with the offers and with a view to
optimizing
the attractive alternatives available to ABN AMRO’s
shareholders.
Background
to the Proposed Offers
Discussions
between ABN AMRO and Barclays
The
ABN
AMRO Managing Board and the ABN AMRO Supervisory Board have reviewed
regularly
ABN AMRO’s strategic growth objectives and the means by which it may achieve
these objectives, including potential business acquisitions and
combinations. In particular, the ABN AMRO Managing Board and the ABN
AMRO Supervisory
Board examined how ABN AMRO might execute its strategy of becoming a
top five
European bank by market capitalization. In addition to the
‘‘standalone’’ option, including growth through the acquisition of smaller
banking operations, the option of merging with another European financial
institution as large or larger than ABN AMRO has been part of the strategic
agenda of the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board. In this context, the Chairman of the ABN AMRO Managing Board,
Mr. Groenink, and the Chief Executive Officer of Barclays, Mr. Varley,
have had
regular contact over the past few years.
On
March
18, 2005, Mr. Groenink and Mr. Varley met to discuss the possibility
of a
business combination in connection with ABN AMRO’s continuing review of its
business and prospects. In advance of the meeting, ABN AMRO and
Barclays separately carried out an analysis which covered, amongst other
things,
strategic and financial rationale for a possible combination, an impact
and
contribution analysis and high level synergies. The discussions
between Mr. Groenink and Mr. Varley were continued at a meeting on November
23,
2005.
On
December 7, 2005 and January 20, 2006, Mr. Groenink and Mr. Varley discussed
the
principles under which the parties would be willing to consider a business
combination transaction. On March 3, 2006, another meeting was held
between Mr. Groenink and Mr. Varley, at which they agreed to exchange
position
papers on a potential combination. ABN AMRO’s position paper was sent
to Barclays on March 24, 2006 and a paper from Barclays was received
by ABN AMRO
shortly thereafter. Following the exchange of position papers, Mr.
Groenink and Mr. Varley met on May 4, 2006 to discuss the potential strategy,
vision and culture of a combined entity.
The
Barclays Board, the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board
separately concluded that a business combination transaction between
Barclays
and ABN AMRO was strategically attractive. During the ABN AMRO Supervisory
Board
annual strategy discussion on July 27 and 28, 2006, different merger
of equals
options were discussed, as well as the ‘‘standalone’’ option with growth through
the acquisition of smaller banking operations and the option of combining
with
another European financial institution that was as large or larger than
ABN
AMRO. At the end of the discussion, the ABN AMRO Supervisory Board
determined that in the case of a merger with ABN AMRO as a junior partner,
a
combination with Barclays was one of its preferred options. During
the remainder of 2006 and first quarter of 2007, the ABN AMRO Managing
Board and
the ABN AMRO Supervisory Board continued to discuss these strategic
options. The Barclays Board also concluded that ABN AMRO was an
attractive merger partner in its strategy meeting on November 16,
2006. Mr. Groenink and Mr. Varley continued to have informal contacts
to explore the potential of a combination.
ABN
AMRO
also discussed with ING Group the possibility of a combination of their
businesses. During the period between December 2006 and March 2007,
Mr. Groenink had several discussions with Mr. Michael Tilmant, Chairman
of the
Executive Committee of ING Group on the possibility of a
transaction. Ultimately, however, the parties discontinued
discussions when a transaction became less attractive as ABN AMRO’s share price
increased significantly, while ING’s share price declined.
ABN
AMRO
initiated talks leading to the current proposed combination with Barclays
when,
on February 8, 2007, Mr. Groenink and Mr. Varley met to discuss the key
principles that would guide any potential combination discussion between
ABN
AMRO and Barclays. These discussions were continued on February 27,
2007.
On
February 22, 2007, the ABN AMRO Managing Board engaged Morgan Stanley
& Co.
Limited (“Morgan Stanley”) to act as its financial advisor in connection with
the potential strategic options outlined above, including a possible
combination
with Barclays. Subsequently, in connection with Morgan Stanley’s
engagement, the ABN AMRO Managing Board requested that Morgan Stanley
evaluate
the fairness, from a financial point of view, to holders of ABN AMRO
ordinary
shares (other than Barclays and its affiliates) of the exchange ratio
to be
received by holders of ABN AMRO ordinary shares pursuant to the combination
solely in their capacity as ordinary shareholders of ABN AMRO.
Also,
on
February 22, 2007, UBS Limited (“UBS”) was engaged by the ABN AMRO Managing
Board as financial advisor in connection with the potential strategic
options
outlined above. Subsequently, in connection with
UBS’s
engagement, the ABN AMRO Managing Board requested that UBS evaluate the
fairness, from a financial point of view, of the exchange ratio to holders
of
ABN AMRO ordinary shares, excluding Barclays and its affiliates.
The
ABN
AMRO Managing Board also engaged Lehman Brothers Europe Limited (“Lehman
Brothers”) on February 22, 2007 to act as its financial advisor in connection
with the potential strategic options outlined above. Lehman Brothers’
advisory role has centered around the synergies of the proposed combination,
potential investor and market reactions and listing considerations.
NM
Rothschild & Sons (“Rothschild”) was appointed by the ABN AMRO Managing
Board in February 2007 to advise on the viability of alternatives to
a
combination with another European financial institution as large or larger
than
ABN AMRO. ABN AMRO Corporate Finance provided initial advice on the
general strategic options available to ABN AMRO. ABN AMRO Hoare
Govett was retained to act as corporate broker in connection with strategic
matters in February 2007 and subsequently in connection with the proposed
exchange offer by Barclays for ABN AMRO ordinary shares and ABN AMRO
ADSs.
Also
during February 2007, the ABN AMRO Managing Board retained Allen & Overy
LLP, Davis Polk & Wardwell and NautaDutilh N.V. to provide it with legal
advice in connection with strategic matters and subsequently retained
them to
advise on the Barclays transaction.
During
February 2007, the Barclays Board requested that JPMorgan Cazenove Limited
act
as corporate broker, and Lazard & Co., Limited act as financial advisor, in
connection with a proposed combination with ABN AMRO. In March 2007,
Barclays
Capital, Citigroup Global Markets Limited, Credit Suisse Securities (Europe)
Limited, Deutsche Bank AG and JPMorgan Cazenove Limited were also contacted
to
act as financial advisors in connection with the proposed combination
with ABN
AMRO.
At
its
meeting on March 14, 2007, the ABN AMRO Supervisory Board approved the
initiation of negotiations with Barclays with a view to a potential
combination.
On
March
16, 2007, Mr. Groenink called Mr. Varley to confirm that he was available
to
investigate a combination of ABN AMRO and Barclays. On March 18,
2007, senior management of ABN AMRO and Barclays, including Mr. Boumeester,
a
member of the ABN AMRO Managing Board, and Mr. Naguib Kheraj, then Group
Finance
Director of Barclays met to commence exploratory discussions on the terms
of any
transaction as well as the terms of a confidentiality and exclusivity
agreement. Subsequently, Mr. Groenink informed Mr. Nout Wellink,
President of the Dutch Central Bank, about the possibility of a combination
transaction and Barclays kept the FSA informed about the status of
discussions.
On
March
19, 2007, ABN AMRO and Barclays issued a press release to confirm that
they were
in exclusive preliminary discussions concerning a potential
combination.
On
March
20, 2007, ABN AMRO and Barclays announced the principles of any potential
combination between them.
On
March
21, 2007, ABN AMRO entered into a confidentiality, exclusivity and standstill
agreement with Barclays. In addition to customary confidentiality
provisions, this agreement provided that neither ABN AMRO nor Barclays
would
solicit any offer from a third party for all or a significant part of
their
respective assets or shares until April 18, 2007. If such an offer
was received in good faith from a third party, however, the agreement
provided
that either the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board or
the Barclays Board, as the case may be, could enter into discussions
with such
third party if required to do so by their fiduciary
duties. Additionally, the agreement permitted either party to have
contacts with a third party to understand the contents of any good faith
indication of interest by such third party.
On
March
21, 2007, the ABN AMRO Supervisory Board engaged Stibbe N.V. to provide
it with
independent Dutch legal advice.
On
March
22, 2007, representatives of ABN AMRO and Barclays together with their
respective financial advisors met to discuss the organization of the
work
streams for any potential combination.
On
March
23, 2007, Mr. Groenink and Mr. Varley met to substantiate further aspects
of the
five broad principles indicated in the press release of March 20, 2007
and to
discuss the organization of the process going forward.
On
March
24, 2007, members of the senior management of ABN AMRO met with members
of
senior management of Barclays in London. The parties exchanged
information on their respective businesses and discussed the process
and timing
for due diligence.
On
March
26, 2007, the ABN AMRO Supervisory Board created an ad hoc advisory
committee, composed of Mr. Martinez, Mr. Olijslager and Mr. van den Bergh
in
order to advise the ABN AMRO Supervisory Board on decisions to be taken
in the
context of the discussions with Barclays or other banks, the actions
of activist
shareholders and the upcoming shareholders’ meeting. In April 2007,
the ad hoc committee met several times to prepare for the ABN AMRO
Supervisory Board meetings.
From
March
26, 2007 to March 30, 2007 representatives from the various business
units of
ABN AMRO and Barclays first met to conduct due diligence, including an
examination of the potential synergies that may result from a
combination. Additional synergy validation and due diligence on
specific topics continued through April 19, 2007.
On
March
27, 2007, representatives of ABN AMRO and Barclays, together with
representatives of their respective financial, legal and tax advisors,
met in
Amsterdam to discuss the potential legal, regulatory and tax structures
of any
combination.
On
March
30, 2007, Mr. Groenink and Mr. Varley met to advance agreement on the
details of
the transaction.
On
April
3, 2007, Mr. Groenink and Mr. Varley met with representatives of the
Dutch
Central Bank (“DNB”). At this meeting the parties jointly presented
their intentions for, and the anticipated benefits of, the proposed combination.
The ABN AMRO Supervisory Board also met on April 3, 2007 and April 11,
2007 to
discuss the latest developments in the negotiations with Barclays.
From
April
3, 2007 to April 16, 2007, the ABN AMRO Managing Board’s legal advisors engaged
in a number of discussions, in person in Amsterdam and London and on
the
telephone, with Barclays’ legal advisors on certain terms of a draft Merger
Protocol. Several of these meetings were attended by Mr. Boumeester
and Mr. Kheraj.
Between
April 4, 2007 and April 21, 2007, representatives of ABN AMRO’s financial
advisors met with representatives of Barclays financial advisors to discuss
the
methodologies to be used in the determination of any potential exchange
ratio.
On
April
12, 2007, the ABN AMRO Supervisory Board engaged Goldman Sachs International
(“Goldman Sachs”) to undertake a study as to the fairness of any proposed
combination with Barclays.
On
April
13, 2007, Mr. Groenink and Mr. Martinez received a letter from the Consortium,
expressing their interest in making an alternative proposal for ABN AMRO
and
requesting, among other things, access to the same diligence information
that
Barclays had received.
On
April
15, 2007, a committee was established by the Barclays Board for the purpose
of
the transaction. During April 2007, the Barclays Board or the committee
met
frequently to receive updates on the status of the discussions with ABN
AMRO
from those members of the Barclays Board involved in the day-to-day
negotiations.
On
April
16, 2007, Mr. Groenink and Mr. Varley met to discuss the progress to
date and to
evaluate the necessity of extending the initial exclusivity
agreement. On April 17, 2007, ABN AMRO and Barclays
separately
announced
that they had agreed to extend the exclusivity period. The ABN AMRO
Supervisory Board also met and received an update on April 17,
2007. On April 18, 2007, Mr. Groenink and Mr. Varley met, and at this
meeting, Mr. Varley gave an update on his meetings with the ABN AMRO
Managing
Board members during the course of the preceding days.
On
the
evening of April 20, 2007, Mr. Boumeester informed Mr. Kheraj of Bank
of
America’s proposal to acquire LaSalle from ABN AMRO prior to a potential
combination of ABN AMRO and Barclays.
On
April
21, 2007, Mr. Groenink and Mr. Varley discussed Bank of America’s proposal to
acquire LaSalle from ABN AMRO prior to a potential combination of ABN
AMRO and
Barclays and the potential impact of this sale on any potential exchange
ratio.
Representatives
of ABN AMRO and Barclays and their respective advisors met on a number
of
occasions in Amsterdam on April 21 and 22, 2007 to discuss further the
draft
Merger Protocol.
On
the
evening of April 21, 2007, Mr. Groenink and Mr. Boumeester met with Mr.
Varley
and Mr. Kheraj in Amsterdam to agree the terms of the proposed combination
with
Barclays, including the exchange ratio of 3.225 Barclays ordinary shares
for
each ABN AMRO ordinary share.
During
March and April 2007, the ABN AMRO Managing Board met frequently and
received
updates on the status of the discussions with Barclays from those members
of the
ABN AMRO Managing Board involved in the day-to-day negotiations. As
noted above, the ABN AMRO Supervisory Board and the ad hoc committee
had also held several meetings during this time frame.
During
the
course of the day on April 22, 2007 the ABN AMRO Managing Board and the
ABN AMRO
Supervisory Board met throughout the day both together and separately
to discuss
the evolving terms of the proposed transaction with Barclays, the proposed
sale
of LaSalle to Bank of America Corporation (see “—The Sale of LaSalle” below) and
the contents of the letter that had been received from the
Consortium.
During
that day, Mr. Groenink updated the ABN AMRO Managing Board on the negotiations
with Barclays several times. Representatives from NautaDutilh N.V.,
Allen & Overy LLP and Davis Polk & Wardwell were also present to brief
the ABN AMRO Managing Board members on the terms of the draft Merger
Protocol. Representatives from UBS delivered to the ABN AMRO Managing
Board an oral opinion, confirmed by delivery of a written opinion, dated
April
22, 2007, to the effect that, as of that date and based on and subject
to
various assumptions made, matters considered and limitations described
in the
opinion, the exchange ratio of 3.225 Barclays ordinary shares for each
ordinary
ABN AMRO ordinary share tendered pursuant to the offer, to be received
by
holders of ABN AMRO ordinary shares, other than Barclays and its affiliates,
was
fair, from a financial point of view, to such holders. Representatives
from
Morgan Stanley reviewed its financial analyses and rendered to the ABN
AMRO
Managing Board its oral opinion, which was subsequently confirmed in
writing and
dated April 22, 2007, to the effect that, as of that date and based upon
and
subject to the various considerations set forth in the opinion, the exchange
ratio set forth pursuant to the proposed Merger Protocol was fair, from
a
financial point of view, to the holders of ABN AMRO ordinary shares,
other than
Barclays and its affiliates, solely in their capacity as ABN AMRO ordinary
shareholders. At its last meeting of the day, having considered a
number of factors, including the due diligence findings, merger benefits
and
financial analysis, the ABN AMRO Managing Board resolved unanimously
to
recommend to the ABN AMRO Supervisory Board to accept the offer for ABN
AMRO
from Barclays and to recommend the same to ABN AMRO’s shareholders.
During
that day, the ABN AMRO Supervisory Board also met with its independent
legal and
financial advisors in an executive session to consider the terms of the
proposed
combination with Barclays. At that session, they were briefed on the
terms of the draft Merger Protocol by Stibbe N.V. Representatives
from Goldman Sachs rendered an oral opinion, later confirmed in writing,
to the
ABN AMRO Supervisory Board that, as of April 22, 2007, based upon and
subject to
the factors and assumptions set forth in such opinion, the ordinary share
exchange ratio to be received by shareholders of ABN AMRO pursuant to
the
combination was fair from a financial point of view to
such
holders. During the day, Mr. Groenink updated the ABN AMRO
Supervisory Board on the latest developments with Barclays and presented
the ABN
AMRO Managing Board’s decision on the Barclays
transaction. Representatives from NautaDutilh N.V., Allen & Overy
LLP and Davis Polk & Wardwell were present to answer questions on the draft
Merger Protocol. At its last meeting of the day, having considered a
number of factors, including the due diligence findings, merger benefits
and
financial analysis, the ABN AMRO Supervisory Board resolved unanimously
to
recommend the exchange offer for acceptance by the holders of the ABN
AMRO
ordinary shares.
In
their
review and analysis of the proposed transaction with Barclays and the
‘‘no
shop’’ provisions in the draft Merger Protocol, both the ABN AMRO Managing Board
and the ABN AMRO Supervisory Board noted that the terms of the Merger
Protocol,
among other things, included provisions permitting them to continue contacts
with a third party existing on April 23, 2007 and, in certain circumstances
described elsewhere in this document, would permit them to withdraw their
respective recommendations if the boards, acting in good faith and observing
their fiduciary duties under applicable law, determined an alternative
offer to
be more beneficial than the exchange offer.
On
the
evening of April 22, 2007, the Committee of the Barclays Board held two
meetings. The first meeting was held to consider, among other
matters, the Merger Protocol, due diligence findings, merger benefits,
financial
analysis, and a draft press announcement. The Committee then
reconvened that same evening to consider the Merger Protocol and the
press
announcement. At the end of this meeting, the Committee resolved to
enter into the Merger Protocol and approved the press announcement.
Following
these meetings, on April 22 and the early hours of April 23, representatives
of
each party together with their legal and financial advisors met again
in
Amsterdam to finalize the Merger Protocol.
On
April
23, 2007, ABN AMRO and Barclays announced that agreement had been reached
on a
combination.
Contacts
with the Royal Bank of Scotland Group PLC, Fortis S.A./N.V. and Banco
Santander
Central Hispano S.A. before April 23, 2007
In
February 2005, Mr. Groenink met with Sir Fred Goodwin, Group Chief
Executive of the Royal Bank of Scotland Group PLC, to exchange views
about
various issues affecting banking in Europe. They also discussed
whether there were any opportunities for a potential combination between
the two
companies, but nothing further came from this initial discussion.
In
the
summer of 2005, Mr. Groenink and Sir Fred Goodwin corresponded in
connection with ABN AMRO’s proposed acquisition of Banca
Antonveneta. On July 5, 2005, in reaction to market speculation
regarding Italian bank transactions, Mr. Groenink received a letter from
Sir Fred Goodwin confirming the statement of the Royal Bank of Scotland
Group
PLC in its 2004 full year results that it had no interest in European
cross-border bank acquisitions at that time.
On
October
31, 2006, Mr. Groenink received a letter from Sir Fred Goodwin
regarding market speculation of a potential acquisition of ABN AMRO and
seeking
to arrange a time to meet with Mr. Groenink to catch up generally.
Mr. Groenink responded the next day, and a meeting was scheduled for
January 9, 2007.
Between
January and March 2007, ABN AMRO and Banco Santander Central Hispano
S.A. engaged in preliminary discussions and negotiations regarding the
possible
purchase by Santander of certain discrete businesses in different geographic
locations that ABN AMRO offered for sale. These preliminary
discussions and negotiations between ABN AMRO and Santander did not result
in the acquisition by Santander of any ABN AMRO businesses.
On
January
9, 2007, Mr. Groenink met Sir Fred Goodwin in Amsterdam, and, during a
wide-ranging conversation, the two discussed whether a combination of
parts of
ABN AMRO and certain businesses of the Royal Bank of Scotland Group PLC
could be
attractive. The discussion related to the merits of combining the
U.S. operations of the Royal Bank of Scotland Group PLC with ABN AMRO’s U.S.
retail and commercial banking activities. During these conversations,
Mr. Groenink disclosed to Sir Fred Goodwin that ABN AMRO
shareholder
Tosca
Holdings had met with him to recommend that ABN AMRO merge with the Royal
Bank
of Scotland Group PLC. Sir Fred Goodwin confirmed that the Royal
Bank of Scotland Group PLC was not working with Tosca Holdings, or, in
this
regard, with any other ABN AMRO shareholder. In this meeting Mr.
Groenink stated that the US banking operations were not for sale at the
time,
but in case a major transaction in Europe would be considered, a sale
of LaSalle
to fund such a transaction would be contemplated.
The
next
day, Mr. Groenink received a letter from Sir Fred Goodwin thanking him
for the meeting and welcoming Mr. Groenink’s thoughts in due
course.
On
March
8, 2007, Mr. Groenink received a telephone call from Sir Fred Goodwin,
who was calling to discuss press and market speculation regarding a potential
acquisition of ABN AMRO. During that conversation, Sir Fred
Goodwin confirmed to Mr. Groenink that the Royal Bank of Scotland Group PLC
was not the source of such speculation and offered to put this in writing
to
Mr. Groenink. At the same time, Sir Fred Goodwin also reiterated
a continued interest in working with ABN AMRO to explore the opportunities
that
might be available by combining the U.S. operations of the Royal Bank
of
Scotland Group PLC with ABN AMRO’s U.S. retail and commercial banking
activities.
Several
days later, Mr. Groenink received a letter from Sir Fred Goodwin dated
March 12, 2007 which reiterated that the Royal Bank of Scotland Group
PLC was
interested in exploring with ABN AMRO any opportunities which might exist
in
relation to the U.S. or more widely to work together to create
value. Sir Fred Goodwin also re-confirmed that the Royal Bank of
Scotland Group PLC had no involvement with Tosca Holdings.
On
April
12, 2007, Mr. Groenink and Mr. Martinez received a letter from the Consortium,
expressing their interest in making an alternative proposal for ABN AMRO
and
requesting, among other things, access to the same diligence information
that
Barclays had received.
By
letter
dated April 17, 2007, ABN AMRO invited the Royal Bank of Scotland Group
PLC,
Fortis S.A./N.V. and Banco Santander Central Hispano S.A. to a meeting
on April 23, 2007 to discuss their proposals and issued an announcement
disclosing this invitation. Several days later, ABN AMRO received a
letter dated April 19, 2007 in which the Consortium accepted the invitation
of
Mr. Groenink and Mr. Martinez to meet to clarify their intentions and
interest with respect to ABN AMRO.
On
April
20, 2007, Mr. Groenink received a telephone call from Sir Fred Goodwin
to discuss the Consortium’s interest in acquiring ABN AMRO.
On April
22, 2007, there was a call between Mr. Groenink and Count Maurice Lippens
concerning the relationship between Fortis S.A./N.V. and
ABN AMRO.
The
Sale of LaSalle
As
part of
its regular review of strategic growth objectives, both the ABN AMRO
Managing
Board and the ABN AMRO Supervisory Board have repeatedly considered and
discussed the future of LaSalle (which includes LaSalle Bank Corporation
and its
subsidiaries LaSalle Bank N.A. and LaSalle Bank Midwest N.A.). In the
course of the mid-2006 review, the ABN AMRO Managing Board and the ABN
AMRO
Supervisory Board reached the view that within the next twelve to eighteen
months, LaSalle would have to either grow through an acquisition or that
it
should be sold (the ‘‘up or out’’ strategy). It was decided at that
time that in light of the fact LaSalle’s profitability remained good and in
light of the current business cycle, there was no reason for an immediate
decision in this matter. The potential disposition of LaSalle was
discussed again at the ABN AMRO Managing Board meeting on February 6,
2007.
As
of
December 31, 2006, LaSalle had more than $113,000 million in tangible
assets and
a tangible book value of $9.7 billion, adjusted for businesses that will
be
retained by ABN AMRO and for the previously announced sale of the mortgage
operations unit and presented on a US GAAP basis. For the year ended
December 31, 2006, LaSalle, presented on the same basis, had net income
of
$1,035 million.
During
the
previous two years, Bank of America and other banks had informally approached
ABN AMRO several times regarding their interest in acquiring
LaSalle. As a result of these informal approaches, both the ABN AMRO
Managing Board and the ABN AMRO Supervisory Board had analyzed a range
of
possible options for the sale of LaSalle and had reviewed the possible
range of
values that might be achieved.
A
potential sale of LaSalle was discussed at an ABN AMRO Supervisory Board
meeting
held on April 17, 2007. Later that evening, Bank of America informed
ABN AMRO, through UBS, of its interest in acquiring LaSalle for a price
of
approximately $20 billion, subject to the completion of due
diligence. Bank of America entered into a confidentiality agreement
with ABN AMRO on April 19, 2007. Over the four day period ending on
April 22, 2007, Bank of America completed its due diligence review of
LaSalle. Updates on the diligence and the negotiations with Bank of
America were discussed at ABN AMRO Managing Board meetings on April 19,
2007 and
April 20, 2007.
On
April
20, 2007, Wachtell, Lipton, Rosen & Katz, counsel to Bank of America,
circulated a draft purchase and sale agreement to Davis Polk & Wardwell,
counsel to ABN AMRO. On April 22, 2007, the parties agreed in
principle on consideration of $21 billion, subject to adjustment, and
later that
day reached agreement on the final terms of the purchase and sale
agreement.
The
sale
of LaSalle was discussed at both the ABN AMRO Managing Board and the
ABN AMRO
Supervisory Board meetings during the day of April 22, 2007. In an
executive session, the ABN AMRO Supervisory Board was briefed on the
LaSalle
Agreement by its legal advisors and on the financial aspects of the deal
by its
financial advisors. Both boards also received advice of counsel that
under Dutch law no shareholder vote was required to consummate the
transaction. The ABN AMRO Managing Board was also briefed on the
LaSalle Agreement by its legal advisors.
Representatives
from UBS delivered to the ABN AMRO Managing Board an oral opinion, confirmed
by
delivery of a written opinion, dated April 22, 2007, as to the fairness,
from a
financial point of view, of the consideration to be received by ABN AMRO
pursuant to the LaSalle Agreement, as of such date and based upon and
subject to
the various considerations set forth in the written opinion.
Representatives
from Morgan Stanley delivered to the ABN AMRO Managing Board an oral
opinion
which was subsequently confirmed in writing and dated April 22, 2007,
as to the
fairness, from a financial point of view, of the consideration to be
received by
ABN AMRO pursuant to the LaSalle Agreement, as of such date and based
upon and
subject to the various considerations set forth in the written
opinion.
Representatives
from Lehman Brothers delivered to the ABN AMRO Managing Board an oral
opinion,
confirmed by delivery of a written opinion, dated April 22, 2007, as
to the
fairness, from a financial point of view, of the consideration to be
received by
ABN AMRO pursuant to the LaSalle Agreement, as of such date and based
upon and
subject to the various considerations set forth in the written
opinion.
On
April
22, 2007, ABN AMRO Bank entered into the LaSalle Agreement with Bank
of America
pursuant to which ABN AMRO Bank agreed to sell LaSalle (which includes
ABN
AMRO’s US commercial, retail and trust banking operations and related
businesses) to Bank of America for a total consideration of $21 billion
in cash
(subject to adjustment based on the financial performance of LaSalle
before the
closing of the sale). ABN AMRO will retain its global operations and,
with limited exceptions, its other operations outside the US, as well
as its
principal broker dealer, investment advisory, wholesale banking and asset
management operations in the US.
The
sale
of LaSalle is subject to regulatory approvals and other customary closing
conditions and its completion is an offer condition of the proposed combination
with Barclays.
Events
after April 23, 2007
The
LaSalle Agreement included a ‘‘go shop’’ provision that permitted ABN AMRO, for
a period of 14 calendar days from April 22, 2007, to enter into a purchase
and
sale agreement for LaSalle with an alternative
bidder,
provided that such alternative bidder’s
proposal was superior from a financial point of view to the LaSalle Agreement,
for cash and not subject to a financing condition. The ‘‘go shop’’
provision granted Bank of America a right to match any such superior
proposal
and provided for Bank of America to receive a $200 million termination
fee if it
did not match such superior proposal.
On
April
25, 2007, ABN AMRO received an indicative proposal from the Consortium,
to
acquire ABN AMRO. Following that date, ABN AMRO made repeated
requests to the Consortium to clarify the terms of their indicative
proposal.
On
April
26, 2007, Vereniging van Effectenbezitters (“VEB”) filed suit in the
Enterprise Chamber of the Amsterdam Court of Appeal seeking, among other
things,
a provisional injunction restraining ABN AMRO and ABN AMRO Bank from
proceeding
to completion under the LaSalle Agreement without approval of ABN AMRO’s
shareholders. On that date, the ABN AMRO Supervisory Board also engaged
Debevoise & Plimpton LLP to provide it with independent US legal
advice.
On
the
evening of April 26, 2007, Mr. Martinez met with Sir Fred Goodwin during
which
meeting Sir Fred Goodwin confirmed the seriousness of the Consortium’s interest
in announcing an offer for ABN AMRO.
On
April
27, 2007, ABN AMRO entered into confidentiality agreements with each
members of
the Consortium, and made available the same information regarding ABN
AMRO as
had been made available to Barclays.
On
April
27, 2007, a purported class action lawsuit relating to the sale of LaSalle
was
filed in the New York State Supreme Court for New York County against
ABN AMRO,
each member of the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board
and Bank of America. The lawsuit, Halpert Enterprises v. ABN AMRO
Holding N.V., et al., generally alleges, among other things, that members
of the ABN AMRO Managing Board and the ABN AMRO Supervisory Board violated
their
fiduciary duties by, among other things, preventing a full and fair sale
process
for the whole of ABN AMRO. The complaint also names Bank of America
as a defendant and seeks, among other forms of relief, a declaration
that the
termination fee is unenforceable, a declaration that the LaSalle Agreement
was
entered into in breach of fiduciary duties and therefore is unlawful
and
unenforceable, an injunction against the consummation of the LaSalle
Agreement,
the imposition of a constructive trust in favor of plaintiff and the
alleged
class and an award of attorneys’ fees and expenses.
On
April
28, 2007, ABN AMRO entered into a confidentiality agreement with the
members of
the Consortium, and made available the same information regarding LaSalle
as had
been made available to Bank of America.
Also
on
April 28, 2007, Mr. Martinez and Sir Tom McKillop, Chairman of the Board
of
Directors of the Royal Bank of Scotland Group PLC, spoke by telephone
about the
general situation and Sir Tom McKillop assured Mr. Martinez that the
financing
for the proposed offer was solidly in place.
From
April
30, 2007 to May 4, 2007, representatives from the various business units
of ABN
AMRO and the members of the Consortium met to conduct due diligence,
including
business overviews and an examination of ABN AMRO’s organizational
structure.
On
May 1,
2007, Mr. Martinez spoke again by telephone with Sir Tom McKillop during
which
call Mr. Martinez urged the Consortium to announce their bid as soon
as possible
and assured Sir Tom McKillop that the ABN AMRO Supervisory Board would,
within
the context of its contractual obligations, run a process that ensured
a level
playing field between the two proposed offers.
On
May 2,
2007, Wilco G. Jiskoot, and Hugh Scott-Barrett, both members of the Managing
Board of ABN AMRO, assisted by representatives of UBS and Morgan Stanley,
met
with Sir Fred Goodwin, Guy Whittaker, Group Finance Director of the Royal
Bank
of Scotland PLC, Lex Kloosterman, Chief Strategy Officer of Fortis S.A./N.V.,
and Luis de Mora Gil-Gallardo, Head of Corporate Development of Banco
Santander
Central Hispano S.A., together with Henrietta Baldock of Merrill Lynch,
to
clarify certain aspects of the Consortium’s proposals.
On
May 3,
2007, the Enterprise Chamber of the Amsterdam Court of Appeal granted
a
provisional injunction restraining ABN AMRO and ABN AMRO Bank from proceeding
to
completion under the LaSalle Agreement without approval of ABN AMRO’s
shareholders.
On
May 4,
2007, Bank of America filed a lawsuit in the United States District Court
of the
Southern District of New York against ABN AMRO. The lawsuit, Bank
of America Corporation v. ABN AMRO BANK N.V. and ABN AMRO Holding N.V.,
generally alleges, among other things, that ABN AMRO Bank breached its
representation in the LaSalle Agreement that no shareholder vote was
necessary
regarding the sale of LaSalle. The complaint seeks injunctive relief
that ABN AMRO Bank be precluded from negotiating for the sale of LaSalle
except
as provided for in the ‘‘go shop’’ provision of the LaSalle Agreement, an order
of specific performance for the delivery of LaSalle to Bank of America
and
unspecified money damages.
On
the
evening of May 4, 2007, Mr. Groenink and Mr. Martinez had a dinner meeting
with
Count Maurice Lippens, Chairman of the Fortis S.A./N.V. Board of Directors,
and
Jean-Paul Votron, Chief Executive Officer of Fortis, during which they
discussed
the Consortium’s interest in acquiring ABN AMRO.
On
May 5,
2007, ABN AMRO received an acquisition proposal from the Consortium,
to purchase
LaSalle for $24.5 billion. This proposal was conditional on the
purchase by the Consortium of ABN AMRO for an indicative price of €38.40 per ABN
AMRO ordinary share and a number of other conditions. The considered
view of the ABN AMRO Managing Board and the ABN AMRO Supervisory Board,
having
received advice from their respective financial and legal advisors, was
that the
Consortium’s acquisition proposal for LaSalle did not constitute an alternative
proposal that was superior from a financial point of view to the LaSalle
Agreement. This conclusion was principally based on the fact that the
Consortium’s proposal for LaSalle was dependent on the success of a potential
offer to be made for ABN AMRO and the various conditions and uncertainties
attached to that potential offer. In particular, fundamental aspects
of the potential offer for ABN AMRO, including with respect to financing,
required regulatory notifications, tax clearances, the proposed material
adverse
change condition, required shareholder approvals and the pro forma financial
impact upon each of the Royal Bank of Scotland Group PLC, Fortis N.V.,
Fortis
SA./NV and Banco Santander Central Hispano S.A., remained unclear despite
repeated requests for clarification since April 25, 2007, the date on
which ABN
AMRO received an indicative proposal from the Consortium to acquire ABN
AMRO. Prior to making their determination on May 6, 2007, the ABN
AMRO Managing Board and the ABN AMRO Supervisory Board sent a detailed
information request letter seeking clarification and evidence on various
aspects
of the Consortium’s potential offer for ABN AMRO which had first been requested
on April 25, 2007, but the requested information was not
provided. Without details about the Consortium’s financing and the
pro forma financial impact on each of the Royal Bank of Scotland Group
PLC,
Fortis N.V. and Fortis SA/NV and Banco Santander Central Hispano S.A.,
the ABN
AMRO Supervisory Board and the ABN AMRO Managing Board were unable to
assess the
likelihood that any separate shareholder vote required by the Royal Bank
of
Scotland Group PLC, Fortis N.V. and Fortis SA/NV and Banco Santander
Central
Hispano S.A. would be successful, and therefore whether or not the potential
offer to acquire ABN AMRO had a reasonable likelihood of
consummation.
The
14-day
‘‘go shop’’ period expired at 11:59 pm New York time on May 6, 2007, and no
alternative agreement was entered into prior to that time. Two other
parties had signed confidentiality agreements and certain due diligence
information had been provided to them but ultimately neither submitted
a bid for
LaSalle.
On
May 15,
2007, ABN AMRO filed an appeal in the Supreme Court of The Netherlands
requesting that the Supreme Court nullify the decision of the Enterprise
Chamber
of the Amsterdam Court of Appeal issued on May 3, 2007 which granted
a
provisional injunction restraining ABN AMRO and ABN AMRO Bank from proceeding
to
completion under the LaSalle Agreement without approval of ABN AMRO’s
shareholders. Bank of America filed an appeal seeking similar relief
with the Supreme Court of The Netherlands also on May 15, 2007, as did
Barclays.
On
May 17,
2007, two ABN AMRO shareholders filed a lawsuit against Bank of America
in the
United States District Court of the Southern District of New
York. The lawsuit, Sadowsky v. Bank of America Corporation,
generally alleges, among other things, that Bank of America entered into
the
LaSalle Agreement with knowledge
that
it
was a defensive mechanism designed to foreclose alternative proposals
to
purchase ABN AMRO and that Bank of America’s lawsuit against ABN AMRO was filed
in breach of the LaSalle Agreement. The complaint seeks rescission of
the LaSalle Agreement, an injunction preventing Bank of America from
enforcing
the LaSalle Agreement, including the termination fee provisions therein,
unspecified money damages and an award of attorneys’ fees and
expenses.
On
May 23,
2007, Barclays and ABN AMRO announced that they were making progress
with the
key regulatory filings required to proceed with the combination and expected
to
disseminate offer documentation in July 2007.
On
May 29,
2007, the Consortium, announced a proposed offer for ABN AMRO.
On
May 30,
2007, ABN AMRO announced publicly that the ABN AMRO Supervisory Board
had formed
a Transaction Committee, formed of the same members as the previously
existing
ad hoc committee (Mr. Martinez, Mr. Olijslager and Mr. van den Bergh)
which would liaise with the ABN AMRO Managing Board and key staff and
advisors
of ABN AMRO on all matters with respect to the Barclays Offer and with
respect
to the Consortium Offer. The Transaction Committee will operate in
all respects so as to enable the ABN AMRO Supervisory Board to take on
an
informed basis and with the help of its own independent financial and
legal
advisors the appropriate decisions with due consideration of the interests
of
ABN AMRO and its stakeholders.
On
June 7,
2007, Mr. Votron spoke with Mr. Jiskoot, regarding valuation issues with
respect
to the Consortium’s proposed offer and the role of ABN AMRO’s Transaction
Committee.
On
June
11, 2007, at the joint request of Bank of America and ABN AMRO, the United
States District Court for the Southern District of New York adjourned
the
initial conference in the lawsuit filed by Bank of America against ABN
AMRO
until July 27, 2007 in view of the pendency of the appeals filed by ABN
AMRO and
Bank of America to the Dutch Supreme Court from the decision of the Enterprise
Chamber of the Amsterdam Court of Appeal dated May 3, 2007.
On
June
12, 2007, Barclays announced publicly that, in collaboration with ABN
AMRO, it
had made substantially all of the pre-acquisition competition and regulatory
filings required to proceed with the proposed combination and expected
to
publish the offer documentation in July 2007.
On
June
12, 2007, Barclays also announced publicly that it had filed the draft
documentation in relation to the exchange offer with regulators in The
Netherlands, the United Kingdom and the United States of America (including
the
draft registration statement on Form F-4 containing the preliminary version
of
the Offer Document/Prospectus).
On
June
12, 2007, Mr. Groenink and Sir Fred Goodwin met in Amsterdam to further
discuss
the terms of the proposal by the Consortium.
On
June
13, 2007, Mr. Jiskoot, together with representatives of UBS and Morgan
Stanley,
met with Mr. Whittaker, Gilbert Mittler, of Fortis S.A./N.V. and Jose
Antonio
Alvarez, of Banco Santander Central Hispano S.A., together with a representative
of Merrill Lynch, to clarify the Consortium’s proposed offer for ABN AMRO with
the understanding that ABN AMRO would not consider or facilitate any
offer that
did not preserve the rights and obligations under the LaSalle
Agreement.
On
June
26, 2007, the Advocate General to the Supreme Court of The Netherlands
published
a recommendation to the Supreme Court to nullify the decision of the
Enterprise
Chamber of the Amsterdam Court of Appeal issued on May 3, 2007. This
recommendation was independent legal advice issued to the Supreme
Court.
On
June
28, 2007, four trade unions joined the investigation proceedings initiated
on
April 26, 2007 by VEB at the Enterprise Chamber of the Amsterdam Court
of
Appeal. The trade unions have put forward certain additional
objections and requested that the Enterprise Chamber of the Amsterdam
Court of
Appeal order an investigation into certain affairs of ABN AMRO in respect
of the
offer process.
On
July 4,
2007, Mr. Votron and Mr. Jiskoot met to discuss the merits of the Consortium’s
proposed offer, valuation issues and the impact of a transaction between
the
Consortium and ABN AMRO on clients and others.
On
July 9,
2007, ABN AMRO filed a statement of defense in response to the request
of VEB to
order an investigation into certain affairs of ABN AMRO in respect of
the offer
process.
On
July
10, 2007, VEB requested that the Enterprise Chamber of the Amsterdam
Court of
Appeal, in the context of the investigation proceedings initiated by
it on April
26, 2007, appoint three independent members of the ABN AMRO Supervisory
Board. The request was revoked prior to the hearing, which was then
cancelled.
Also
on
July 10, 2007, as a follow-up to the meetings on June 13, 2007, Mr. Groenink
wrote to Sir Fred Goodwin and, referring to interim discussions between
advisors
regarding the possible division of the Dutch operations between RBS and
Fortis,
clarified certain facts relating to the organization of those operations
and the
related financial implications and indicated further important information
could
be shared in the interests of clarification. In this letter, Mr.
Groenink also expressed his concerns about figures used by the Consortium
in
relation to ABN AMRO wholesale business. On July 11, 2007, Sir Fred
Goodwin responded with a letter requesting such information and expressing
willingness to schedule a further meeting.
On
July
13, 2007, the Supreme Court of the Netherlands upheld the appeals filed
by ABN
AMRO, Bank of America and Barclays on May 15, 2007 against the decision
of the
Enterprise Chamber of the Amsterdam Court of Appeal issued on May 3,
2007. The Supreme Court nullified the decision of the Enterprise
Chamber of the Amsterdam Court of Appeal and irrevocably dismissed the
request
of VEB for a provisional injunction restraining ABN AMRO and ABN AMRO
Bank from
proceeding to completion under the LaSalle Agreement without approval
of ABN
AMRO’s shareholders.
On
the
same day, Mr. Groenink called Sir Fred Goodwin to seek clarification
of the
Consortium’s position following the Supreme Court’s ruling. Sir Fred
Goodwin confirmed that the Consortium would clarify its position
shortly. During a subsequent telephone conversation, Sir Fred Goodwin
advised Mr. Martinez that the Consortium intended to make a revised offer
which
would be materially higher than Barclays’ proposed offer and that it would be a
condition of that revised offer that ABN AMRO did not make any further
disposals
of a material part of its business or assets. Mr. Martinez confirmed
that ABN AMRO would treat any revised offer by the Consortium for ABN
AMRO,
without LaSalle, on a level playing field with Barclays’ proposed
offer. There was a subsequent follow up call between Mr. Groenink and
Sir Fred Goodwin.
Later
that
day, the Consortium wrote to Mr. Martinez and Mr. Groenink confirming
that they
intended to bid for ABN AMRO, that their bid would be conditional, amongst
other
things, upon there being no further disposals by ABN AMRO of a material
part of
its business or assets, and that it remained the Consortium’s preference to work
with the ABN AMRO Boards to secure their recommendation for the Consortium’s
proposals. The Consortium also issued a press release confirming
their intention to proceed with a revised bid for ABN AMRO excluding
LaSalle.
On
July
15, 2007, during separate telephone conversations with each of Mr. Martinez
and
Mr. Groenink, Sir Fred Goodwin confirmed that the Consortium would be
making a
revised proposed offer at €38.40 per ABN AMRO ordinary share. Mr.
Martinez and Mr. Groenink, each reconfirmed that this revised proposed
offer
would be treated on a level playing field with Barclays’ proposed offer and that
ABN AMRO had no intention of making any major assets disposals at the
current
time.
On
July
16, 2007, the Consortium announced its intention to make an offer to
acquire ABN
AMRO for approximately $98 billion, through a combination of cash and
newly
issued shares of RBS.
Also
on
that day and further to the correspondence between Mr. Groenink and Sir
Fred
Goodwin on July 10 and 11, 2007, representatives of RBS and Fortis met
with ABN
AMRO representatives to discuss and share limited historical management
accounting information for periods in 2005 and 2006 relating to ABN AMRO’s
business units.
On
the
evening of July 18, 2007, Mr. Varley informed Mr. Groenink that the AFM
had
granted Barclays an extension so that an announcement of its formal offer
documentation being available could be made on or before August 6,
2007. Mr. Varley also informed Mr. Groenink that Barclays was
considering possible alternative offer structures, including the introduction
of
a partial cash consideration element into its offer.
On
the
same day, during telephone conversations between Mr. Groenink and Sir
Fred
Goodwin, Mr. Groenink confirmed that the Consortium’s revised proposed offer
would be assessed in a fair and transparent manner and that ABN AMRO
had no
intention of making any major asset disposals at that time.
On
July
19, 2007, Barclays announced it was considering possible alternative
offer
structures, including the introduction of a partial cash consideration
element
into its offer but that no decision had yet been taken.
On
the
evening of July 19, 2007, during a telephone conversation between Mr.
Groenink
and Mr. Varley, Mr. Varley outlined further details about the
revised offer for ABN AMRO that Barclays was considering.
On
July
20, 2007, the Central Works Council of ABN AMRO provided positive
advice in respect of the proposed combination with
Barclays.
On
the
evening of July 20, 2007, ABN AMRO received a letter from
Barclays outlining the terms and conditions of its revised offer for ABN
AMRO.
On
July 21
and 22, 2007, representatives of ABN AMRO and Barclays discussed and
agreed the
provisions of an amendment to the Merger Protocol dated April 23, 2007,
to
accommodate ABN AMRO review of the revised proposal from Barclays and
to
facilitate Barclays public announcement of its revised proposal on 23
July
2007.
On
July
23, 2007, Barclays announced the revised terms of its offer for ABN
AMRO.
On
July
24, 2007, Mr. Groenink wrote to Sir Fred Goodwin inviting the Consortium
to make
a presentation about its offer on July 25, 2007. On the same day, Sir
Fred Goodwin declined the invitation, stating that it would not be feasible
to
have the presentation the next day, but suggesting that the parties find
another date for such a presentation.
On
July
25, 2007, Mr. Varley sent a letter to Mr. Groenink and Mr. Martinez to
restate
the key points underlying Barclays revised proposal and why the ABN AMRO
Boards
should continue to recommend this proposed exchanged offer to ABN AMRO
shareholders.
Also
on
July 25, 2007, Mr. Martinez called Sir Fred Goodwin noting that the ABN
AMRO
Supervisory Board would be meeting on July 26 and July 27, 2007 and asking
if
Sir Fred Goodwin had any message or information that he would like to
have
passed on to the ABN AMRO Supervisory Board. Sir Fred Goodwin
responded that all of the relevant information had been previously communicated
or was in the offer.
On
July
26, 2007, Barclays filed with the SEC an amendment to its draft registration
statement on Form F-4 containing a revised draft of its offer
document/prospectus.
On
the
morning of July 26, 2007, the ABN AMRO Managing Board met to consider
the
revised terms of the Barclays proposed exchange offer and the terms of
the
Consortium Offer.
Later
on
the same day, the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board
held a joint meeting to discuss the two competing proposals and received
a
combined presentation from members of the ABN AMRO Managing Board, outside
legal
counsel and financial advisors and members of the management, followed
by a
Q&A session.
On
the
evening of July 26, 2007, Mr. Varley made a presentation to the ABN AMRO
Supervisory Board and Mr. Groenink.
During
the
course of the day on July 27, 2007, the ABN AMRO Managing Board and the
ABN AMRO
Supervisory Board met throughout the day both together and separately,
in
executive sessions and with outside legal counsels and financial
advisors. As a result of these meetings, each of the ABN AMRO
Managing Board and the ABN AMRO Supervisory Board, after having considered
the
advice of outside legal counsel and financial advisors, acting in good
faith and
observing their fiduciary duties resolved to make the statement contained
in the
press release issued on July 30, 2007 and also reflected in Item 4 below
(see
“—Reasons for the Recommendation”).
On
the
evening of July 27, 2007, Mr. Groenink and Mr. Varley agreed in principle
that
neither ABN AMRO, nor Barclays, wished to terminate the Merger Protocol
and/or
to claim payment, at that time, of the break fees contemplated
therein.
On
July
27, 2007, the lawsuit filed in the United States District Court of the
Southern
District of New York against ABN AMRO by Bank of America on May 4, 2007,
was
dismissed without prejudice.
During
the
course of the day on July 28, and July 29, representatives of ABN AMRO
and
Barclays, and their respective advisors, worked on the second amendment
to the
Merger Protocol, dated July 30, 2007.
On
July
31, 2007, Mr. Groenink was quoted by the Wall Street Journal as having
said that
“We continue to support the Barclays offer because we believe overall
it is to
the benefit of shareholders and stakeholders”. This quotation is based on a
press conference and was taken out of context. Immediately
thereafter, Mr. Groenink expressly said that the ABN AMRO Board recognized
that
the value to the shareholders of the Barclays Offer was inferior to
what the
Consortium was offering and that therefore, at this point, the Board
could not
recommend the Barclays Offer to shareholders. This message, which was
part of an extended discussion on the level playing field and the requirements
of Dutch law was intended to be, and when read in its full context
was, in line
with the position of the ABN AMRO Managing Board and the ABN AMRO Supervisory
Board, as reflected in the July 30, 2007 press release, that “notwithstanding
their support of the strategic benefits of the combination with Barclays,
they
are not currently in a position to recommend either the Consortium
Offer or the
Barclays Offer for acceptance to ABN AMRO shareholders” (see “—Reasons for the
Recommendation” below).
On
August
2, 2007, a hearing will was held at the Enterprise Chamber of the Amsterdam
Court of Appeal in respect of the requests of VEB and four trade unions
to order
an investigation into certain affairs of ABN AMRO in respect of the offer
process. In relation thereto, ABN AMRO has committed to continue to
update investors in accordance with all applicable laws and
regulations.
On
August
3, 2007 ABN AMRO filed an amendment to its Form 20-F.
On
August
3, 2007, Barclays filed with the SEC the third amendment to its draft
Registration Statement on Form F-4 containing a revised draft of its
offer
document/prospectus, followed, after discussions with the SEC on August
3, 2007
by the filing of the fourth amendment. At 5:30 pm Eastern Standard
Time on August 3, 2007, the Barclays Form F-4 was declared effective
by the
SEC.
On
August
3, 2007, Mr. Groenink was reported by the Het Financiale Dagblad, a Dutch
financial newspaper, to have recommended Fortis shareholders vote against
the
rights issue contemplated by Fortis. He was quoted as having said
“Shareholders would do well to vote against the takeover. If it goes ahead
the
Fortis share price will fall further”. Mr. Groenink’s position is
that he was misquoted.
On
August
3, 2007, Mr. Martinez received a call from Sir Fred Goodwin who expressed
his
concern with respect to the press reports about Mr. Groenink’s purported
comments on the Fortis shareholders vote and raised questions about whether
such
comments were meant to question the existence of a real level playing
field. Mr. Martinez reaffirmed the position of the ABN AMRO
Supervisory Board to maintain a level playing field and his belief that
Mr.
Groenink had been misquoted. Later on the same day, Mr. Martinez
conveyed the same message during a telephone conversation with Sir Tom
McKillop.
On
August
4, 2007, Mr. Jiskoot called Mr. Votron to discuss the media reports about
the
Fortis shareholder vote. Also on August 4, 2007, Mr. Martinez and Sir
Fred Goodwin had a separate telephone conversation during
which
they
agreed that ABN AMRO and the Consortium should issue a joint statement
about the
fact that Mr. Groenink had been misquoted and to acknowledge on the
part of both the Consortium and the ABN AMRO Supervisory and Managing
Boards
that a level playing field was being maintained.
On
the
afternoon of August 5, 2007, ABN AMRO and the Consortium issued a joint
press-release in which the Consortium accepted the assurances by ABN
AMRO that
Mr. Groenink was misquoted as having given advice how to vote to Fortis
shareholders and ABN AMRO and the Consortium confirmed that there was
no dispute
about the profitability of the Business Unit The Netherlands. ABN
AMRO and the Consortium further announced that they had agreed to continue
the
constructive dialogue to resolve any outstanding questions regarding
the
Consortium Offer, and to maintain a level playing field.
On
August
6, 2007 Barclays launched the Barclays Offer in the Netherlands, the
United
Kingdom, the United States and certain other jurisdictions.
Also
on
August 6, 2007, the Consortium Offer was approved by the Fortis
shareholders.
During
the
week of August 6, 2007, ABN AMRO’s financial advisors had several telephone
conversations with financial advisors to the Consortium and on August 9,
2007 business principals from the members of the Consortium along with
their
financial advisors and business principals from ABN AMRO along with
their
financial advisors met in London at a meeting where various diligence
and
business information was discussed and in which it was agreed that
further discussions would take place.
Reasons
for the Recommendation
Reasoned
Opinion (gemotiveerde standpuntbepaling) from the ABN AMRO
Boards
The
ABN
AMRO Supervisory and the ABN AMRO Managing Board (the “ABN AMRO Boards”), in
their respective meetings on July 26 and 27, 2007, discussed the Consortium
Offer and the proposed Barclays offer (the “Barclays Offer”, together with the
Consortium Offer, the “Offers”, and each of the Offers, an “Offer”) with a view
to coming to a reasoned position on both Offers taking into account the
best
interest of ABN AMRO’s shareholders and other stakeholders. In doing so, the ABN
AMRO Boards assessed each Offer in the context of the following
elements:
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1.
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Interest
of shareholders and other
stakeholders:
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·
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Shareholders:
the current value of the Offers, the mix of consideration,
the degree of
sensitivity, as appropriate, of the value of the offers to
the offerors’
share prices, proposed synergies and ABN AMRO’s strategic
vision;
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Employees:
career opportunities, commitments, any proposed gross and net
redundancies
and the formal advice and opinions of, as well as views expressed
by,
employee representative bodies;
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Customers:
service quality and continuity with regard to product offerings
and
business model;
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Creditors:
financial strength and long-term ratings of the ongoing
businesses.
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The
ABN
AMRO Boards would anticipate that the De Nederlandsche Bank (“DNB”) and other
regulators, in performing their roles and making their final determinations,
will discipline and monitor both offerors in the best interest of customers,
creditors, the financial system and society at large.
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2.
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Risks
associated with each proposed
transaction:
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·
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Execution
risks, including the likelihood and timing of regulatory and
shareholder approvals, the wording of the “Material Adverse Change” clause
and other pre-offer and offer conditions or fiduciary outs
of each
offer;
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Post–acquisition
risks: where relevant, break-up and integration risks, capital
adequacy and funding, legal and compliance risks and business
integrity
risks.
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Where
relevant, Headquarter location, Board structure and representation,
likely
distribution of senior and middle management
positions.
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Barclays
announced on July 23, 2007 the proposed revised terms of the Barclays
of its
Offer. Barclays expects to launch such Offer as soon as practicable,
subject to, inter alia, regulatory approval for the Barclays Offer to
be
made.
The
revised Barclays Offer includes amended offer terms and has introduced
a
significant cash element, together with a mix-and-match alternative.
The value
of this Offer, however, remains highly dependent on the share price performance
of Barclays.
The
ABN
AMRO Boards note that the proposed merger with Barclays is consistent
with ABN
AMRO’s previously articulated strategic vision. In addition, the strategic
cooperation with China Development Bank should further enhance the growth
opportunities of a potential combined Barclays/ABN AMRO group in the
attractive
Asian market and could result in creation of additional longer-term value
for
ABN AMRO shareholders.
The
proposed transaction with Barclays is understood to be well on track
to receive
the required regulatory approvals and generally has acceptable and manageable
post-acquisition risks.
The
ABN
AMRO Boards also took into account the positive opinion of the European
Staff
Council and the positive advice of the Central Works Council in respect
of the
proposed combination with Barclays received by ABN AMRO as part of the
consultation process. The ABN AMRO Boards also noted the commitments
made to
employees and trade unions in respect of employee’s rights and respecting of
existing agreements.
The
approval of the shareholders of Barclays is still outstanding and is
currently
expected at the earliest mid-September 2007. The outcome of that vote
remains uncertain at this stage.
As
at
market close on July 27, 2007, the Barclays Offer was at a 1.0% discount
to the
ABN AMRO market price and at an 8.8% discount to the see-through value
of the
Consortium Offer.1
The
ABN
AMRO Boards are therefore, notwithstanding their support of the strategic
benefits of the combination with Barclays, not currently in a position
to
recommend from a financial point of view the Barclays Offer for acceptance
to
ABN AMRO shareholders.
The
Consortium formally launched its Offer on July 21, 2007. The tender
offer period, if not extended, is expected to end on October 5,
2007.
The
current value of the Consortium Offer, with its high cash component,
is
attractive to ABN AMRO shareholders. As at the market close on July
27, 2007, the Consortium Offer was at a premium of 8.5% to the ABN AMRO
market
price and of 9.6% to the Barclays Offer’s implied value.2
The
ABN
AMRO Boards welcome the efforts made by the Consortium in establishing
a
dialogue with the ABN AMRO employee representative bodies and the commitments
made to ABN AMRO employees with respect to redundancy procedures.
1
As of the European market close on August 10, 2007, the Barclays
Offer was
at a 1.7% discount to the ABN AMRO market price and at a 12.6% discount
to the
see-through value of the Consortium Offer.*
2
As of the European market close on August 10, 2007, the Consortium
Offer was at
a premium of 12.4% to the ABN AMRO market price and of 14.4% to the
Barclays
Offer’s implied value.*
*
Percentages
have been determined using the exchange rate of GBP 1.00 =
EUR 1.4810, as
published by the Financial Times on August 10,
2007.
The
ABN
AMRO Boards have identified a number of significant risks to the Consortium
Offer:
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1.
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Whereas
sources of integration risks are broadly similar to those identified
for
the Barclays Offer, the ABN AMRO Boards have significant unresolved
questions about the proposed break-up of ABN AMRO and the proposed
methodology of the Consortium to implement such a break-up
(as also
explained to the Consortium on May 5, 2007 and included in
our press
release dated May 14, 2007);
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2.
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Whereas
Santander shareholders have already approved the proposed transaction,
approvals of the shareholders of Fortis and RBS are still outstanding
and
expected at the earliest on, respectively, August 6 and August
10. The outcome of those votes remains uncertain at this
stage;
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3.
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The
approval of the proposed transaction by the Ministry of Finance
and the
views of the Dutch Central Bank in this respect remain uncertain,
including as to timing and associated conditions of any such
approval,
particularly in view of the proposed
break-up;
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4.
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The
broadly defined “Material Adverse Change” clause as it is currently worded
in the Consortium Offer is more onerous and uncertain than
the proposed
equivalent Barclays clause.
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Taking
the
above factors into account, the ABN AMRO Boards are not currently in
a position
to recommend the Consortium Offer for acceptance to ABN AMRO
shareholders.
In
light
of the above, the ABN AMRO Boards are not currently in a position to
recommend
either Offer for acceptance to ABN AMRO shareholders. ABN AMRO will
further engage with both parties with the aim of continuing to ensure
a level
playing field and minimizing any of the uncertainties currently associated
with
the Offers and with a view to optimizing the attractive alternatives
available
to ABN AMRO’s shareholders.
The
ABN
AMRO Boards note the approval of the Consortium Offer by the Fortis
shareholders and the RBS shareholders. The ABN AMRO Boards have not
changed the conclusion they reached on July 26 and 27, 2007 and will
continue to engage with both parties as described above. Depending on
further developments, the ABN AMRO Boards may re-evaluate their position
and will inform the ABN AMRO shareholders
accordingly.