Royal Bank of Scotland (RBS) first discussed doing a deal with ABN Amro two and a half years ago, according to documents released on Friday. The RBS-led consortium - which includes Santander of Spain and Belgo-Dutch Fortis - on Friday night posted its €71.1 billion offer for the bank. The bid competes with an all-share agreed €64 billion offer from Barclays.
The documents posted by the consortium show Sir Fred Goodwin, chief executive of RBS, first met Rijkman Groenink of ABN Amro to discuss a combination of the two banks in February 2005, but nothing came of the talks. They corresponded regularly in 2005 and 2006 and met on January 9th this year to discuss whether ABN's US operations, including LaSalle and RBS's US division, could be combined.
Mr Groenink disclosed at that meeting he had met Tosca Holdings, the hedge fund, which recommended ABN merge with RBS. Sir Fred said RBS was not working with Tosca or any other ABN shareholder. The documents show RBS and Santander first held meetings to discuss a joint bid in January this year.
Since Barclays announced its offer for ABN in April, there have been at least three face-to-face meetings between Sir Fred and ABN executives.
On Friday, RBS issued a profit estimate for the first half of 2007. It is due to publish interim results in a fortnight but said profit before tax, intangibles, amortisation and integration costs for the period was expected to be not less than £5 billion (€7.4 billion).
The documents show the projected transaction costs for the consortium to complete the deal are about €600 million.
They also show that Merrill Lynch is underwriting the rights offering for Fortis, regarded as the weak link in the consortium. The aggregate amount of Merrill Lynch's standby underwriting is about €17 billion.
