The Acquisition of ABN AMRO (B)


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Case Details:

Case Code : BSTR346
Case Length : 23 Pages
Period : 2007-09
Pub Date : 2009
Teaching Note :Not Available
Organization : ABN AMRO / Royal Bank of Scotland / Fortis / Banco Santander Central Hispano
Industry : Banking / Financial Services
Countries : UK, Belgium, Spain, The Netherlands

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Acquisition

In early 2007, the institutional shareholders in ABN AMRO raised the issue of spinning off certain units of ABN AMRO or selling the whole business to a stronger bank. Its shareholders felt that the stock had been stagnant and was under valued.

To improve its performance, ABN AMRO should consider selling all or some of its assets, they said. ABN AMRO and Barclays started negotiating for a friendly merger in early 2007. The RBS-led consortium approached ABN AMRO with a proposal for acquisition but ABN AMRO turned down the proposal...

Events after Acquisition

The acquisition of ABN AMRO turned out to be a disaster for two of the three consortium members. The timing of the deal played a major role besides the high price the consortium paid for ABN AMRO. The deal, which involved the majority of payment being in the form of cash, depleted the capital levels of RBS and Fortis significantly...

The Outlook

On August 07, 2009, RBS announced its results for the first half of 2009. It reported a total income of 14.8 billion, about a 27% increase as compared to the first half in fiscal 2008. It made a net loss of 1.04 billion as compared to the net loss of 827 million in the first half of 2008...

Exhibits

Exhibit I: A Note on Sub-Prime Crisis
Exhibit IIA: Income Statement of RBS (2006-08)
Exhibit IIB: Balance Sheet of RBS (2007-08)
Exhibit III: RBS Stock Price Chart

Exhibit IV: Apology Statement Issued by Sir Tom McKillop
Exhibit VA: Income Statement of Fortis Group (2005-07)
Exhibit VB: Balance Sheet of Fortis Group (2005-07)
Exhibit VI: Fortis Stock Price Chart
Exhibit VIIA: Income Statement of Santander (2006-08)
Exhibit VIIB: Balance Sheet of Santander (2006-08)


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