Court: ABN Amro Can Sell US Arm to BofA

ABN Amro's sale of its U.S. arm LaSalle Bank to Bank of America was lawful, the Dutch Supreme Court ruled Friday — overturning a lower court's move blocking the proposed $21 billion sale.

It was not immediately clear how the ruling would affect the broader fight between Barclays PLC and a consortium led by Royal Bank of Scotland PLC over competing bids for all of ABN Amro Holding NV.

Barclays has proposed to pay about $86 billion in stock for ABN, which is the largest banking company in The Netherlands.

The RBS consortium submitted a rival $95.6 billion offer for ABN but said it was dependent on LaSalle remaining within ABN.

Either deal would be the largest takeover in the banking industry.

RBS had sought a court ruling on the LaSalle sale, arguing that it should have been put to a shareholder vote.

But the court said that shareholders' interests don't always come first.

"The fact that the shareholders aim at selling their shares at the highest possible price involves no obligation for the board of directors of ABN Amro to obtain the shareholders' approval of the sale of LaSalle, nor does such an obligation arise from the prevailing views of the law in The Netherlands," it said.

"Now that the sale of LaSalle is definite ... there should not be any unnecessary uncertainty about the carrying out of this agreement, into which the board of directors of ABN Amro was entitled to enter," the ruling said.

In a statement, Barclays said it was "pleased to see the Supreme Court has made a very clear ruling." But calls to RBS were not immediately returned.

Bank of America spokesman Frans van der Grint called the ruling "a complete victory for us and ABN Amro."

"We're satisfied with this ruling which will allow us to complete the transaction as soon as possible," he said.

Van der Grint said he now expected the purchase of Chicago-based LaSalle Bank Corp. to proceed "swiftly," but did not specify a time frame.

ABN Amro Chief Executive Rijkman Groenink declined to call the decision a victory for its merger plans with Barclays.

"At this moment we have an agreement with Barclays, and it flows forth from that that we recommend their offer. But at the same time it's clear that if an offer comes from the consortium, we'll take it very serious," he told RTL television.

"We put a lot of emphasis on the interest of our shareholders, but also those of other parties with an interest in the bank," he said, referring to employees and clients. Under Dutch law — unlike U.S. law — managers must take the interest of all "stakeholders" into account when making decisions," he said.

In a statement, Barclays said it was "pleased to see the Supreme Court has made a very clear ruling."

Peter Paul de Vries, director of the Dutch shareholder rights organization VEB, noted that ABN's board was cheering the decision, but said "I don't know why."

"They may have won this battle, but they will lose the war," he said, referring to ABN's support for the deal with Barclays.

"I don't think Barclays' bid will be interesting (attractive) for many shareholders" because it's billions of euros (dollars) lower than the alternative, he said.

Barclays has offered shares valued at 63 billion euros ($86 billion), or 34.05 euros ($46.48) per share at current levels for ABN. The RBS consortium's mostly cash offer is worth 70 billion euros ($95.6 billion), or 38.29 euros ($52.27) per share.

ABN shares rose 0.6 percent to 35.55 euros ($48.89) Friday, suggesting that considerable doubt continues as to which offer will prevail.

Barclays shares rose 1 percent to 725.5 pence ($14.74) on the London Stock Exchange, where RBS shares gained 1 percent to 641 pence ($13.02). Shares of RBS consortium member Fortis NV of Belgium gained 0.7 percent to 31.27 euros ($43.05).

Analysts from Keefe, Bruyette and Woods predicted the RBS consortium would rebid for the rest of ABN.

"We expect a swift reaction from the consortium regarding an offer ex-LaSalle," they said in a research note after the ruling.

"The most likely scenario is that Barclays will launch an offer on its current terms first, then followed by an offer by the consortium ... Barclays could then potentially upgrade its offer."

RBS partner Fortis wants ABN's Dutch operations, while Banco Santander Central Hispano SA of Spain wants its Italian and Brazilian operations. Even without LaSalle, RBS is interested in ABN Amro's investment banking operations and the rest of its global operations unclaimed by Fortis or Santander.

Representatives for Santander and Fortis told Dow Jones Newswires they would study the ruling before making a comment.

Dutch financial regulators have given both Barclays and the RBS consortium a deadline of July 23 to make their formal bids for ABN.