ABN, Shareholders and the Missing $6.82 Billion
![[Groenink]](http://s.wsj.net/public/resources/images/HC-GH248_Groeni_20060731135648.gif) |
| Groenink |
Sure, we understand how the deal game is played. Still, we can’t help asking, who’s responsible for ABN Amro Holding shareholders’ missing $6.82 billion?
According to our Dow Jones Newswires colleagues, ABN Chief Executive Rijkman Groenink told his shareholders today that the Dutch bank is valued at roughly 27 euros a share (or $36.82) on a standalone basis, but that the value of the sum of its parts is more like 34 euros to 36 euros a share (or as much as $49.10) if it were broken up. That’s a difference of as much as nine euros a share, or $12.28.
Now on Monday, Barclays bid 36.25 euros a share, or a total of 67 billion euros ($91 billion) for ABN. Wednesday, a consortium of Royal Bank of Scotland, Fortis and Banco Santander Central Hispano put a its bid for ABN of 39 euros a share, or about 72 billion euros ($98 billion).
Remember, the Barclays deal is the one Groenink wants. According to this Wall Street Journal article, he settled on a friendly takeover deal with Barclays largely because it agreed to his insistence that the sprawling 183-year-old Dutch bank not be broken up. And according to that same WSJ article, the consortium would divvy up ABN among themselves like so many orange slices.
So, we understand that Groenink was defending the Barclays deal — pointing out that Barclays has offered not the 27-euro-a-share value of the standalone company but more than his higher 36-euro-a-share estimate of the breakup value of the company.
But here’s we did our doubletake. Did Groenink really tell any shareholders reading between the lines that by running the bank in its present form management has cost shareholders $6.82 billion of value? (The sum of the parts — 27 euros a share — less the value of the bank as a standalone business, or as much as 36 euros a share.)
Certainly we want to be there at his next job interview to hear him explain how that worked.
Shareholders certainly seem to be paying attention. According to our Dow Jones Newswires colleagues today, ABN shareholders have voted in favor of a sale or breakup of the Dutch bank, the strongest indications yet that investors are dissatisfied with ABM’s recent track record and desire change.
all ceos have a hidden agenda to line their pockets esp. when they come sell their entrusted cos. all their perks would be vested immediately, plus many more that most don’t even dream of.
I disagree to the comment above, because it’s an un-supported and too broad of a statement.
I used IntellectSpace Knowledge Map and did not find any relationships that Mr. Groenink might have with Barclays that would suggest a conflict of interest with its shareholders. As a matter of fact, according to NewsVisual blog, ABN Amro’s board has very little to no common 3rd party vested interests with Barclays. This leads me to a conclusion that there are no improper motives in this deal. Here is a URL to the NewsVisual blog: http://www.newsvisual.com/newsvisual/2007/04/how_well_are_ab.html
To breakup the assets or not…lets not get out of line when it comes to shareholder value…a difference of $6.82 Billion means a lot more to shareholders then keeping a83-year old banking company together…a very expensive giveaway to Barclays. Chief Ex. Groenink should be releaved of his position. I doubt if the Comptroller of the Currency, U.S. regulatory body will approve the sale of LaSalle Bank to Bank of America Corp for$21 billion, without a vote of the shareholders, and at 19 times earnings. What a premium!
I think it is great that LaSalle is going to be sold to a American Bank and not another Foreign Bank wanting to suck the profits out of the U.S.
ABN Chief Executive Rijkman Groenink and his board are not working in the interest of the shareholders and “sold” LaSalle trough the back door like crooks. The bottom line is this: the easy way or the hard way, it doesn’t matter. RBS will make his bid, so why not let it be instead of risking law suits and useless delays.
What has happened to the formal inquiry into
Groenink and others purchasing ABN stock earlier in the year. Has that gone unnoticed?
re: breakup value > current market value, isn’t that common?
breakup value isn’t real… more like breakup value - cost of breaking up a company > current market value –> problems
costs of breaking up a company, largely dictated by regulatory regime put in place to “protect” SHs = buffer for mgmt to steal from SHs, whether it be by running the company inefficiently, putting personal power above SH returns, just plain stealing, etc…?
Someone needs to follow up on 5 employee suit against Rijkman and ABN who were fired as the scapegoats in money laundering scam. Whay is the status of this suit? It will speak to his integrity as I understand the lawsuit claims he may have knowledge of this laundering yet did nothing to stop it.
If RBS is objecting that LaSalle is being sold too cheaply, it simply needs to put in a higher bid for it. ABN management have already pointed out that RBS is free to bid for both parts of ABN.
Which iof the RBS consortium partners wants LaSalle? If it’s so important to them, then why not bid for it now.
My conclusion is that RBS is simply trying to frustrate the Barclays deal so that Barclays doesn’t overtake it.
RBS shareholders need to be cautious of their management’s ego, as it will destroy value if left unchecked.
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