RBS, Fortis and Santander consortium → ABN AMRO
The largest bank takeover in history when it closed in October 2007: a €71.1bn bid by RBS, Fortis and Santander to buy ABN AMRO and split it three ways — completed a year before the financial crisis turned two of the three buyers into state rescues.
A €71.1bn three-way break-up bid that outbid Barclays; the debt taken on contributed to RBS's near-collapse a year later.
- Value
- $98B
- Announced
- April 2007
- Completed
- October 2007
- Sector
- Banking
- Deal type
- acquisition
- Acquirer
- RBS, Fortis and Santander consortium (United Kingdom)
- Target
- ABN AMRO (Netherlands)
Why it mattered
The contest began with an activist. In February 2007 the hedge fund TCI demanded that ABN AMRO's board sell or break up the bank, arguing that its parts were worth more than its share price. ABN AMRO agreed a merger with Barclays in April, and at the same time agreed to sell LaSalle, its Chicago bank, to Bank of America for $21bn — a sale widely read as a defence, because LaSalle was the piece the Royal Bank of Scotland wanted most.
RBS answered with a consortium. Through RFS Holdings — named after the three buyers' initials — RBS would take the wholesale and investment bank and the Asian network, Fortis the Dutch retail and business bank and asset management, and Santander Banco Real in Brazil and Antonveneta in Italy. After LaSalle was sold the consortium kept its offer at €38.40 a share, 93% in cash, against Barclays' €35.73, mostly in shares. ABN AMRO's board withdrew its support for Barclays at the end of July, Barclays gave up on 5 October, and RFS Holdings took control on 17 October, just as credit markets were closing.
What it left behind
The break-up that made the numbers work left each buyer holding a leveraged piece at the worst possible moment. RBS raised £12bn in a rights issue in April 2008, was rescued by the UK government in October, and reported a 2008 loss of £24.1bn, the largest in British corporate history, about £16.8bn of it write-downs linked to ABN AMRO. Fortis, whose capital the purchase had drained, was broken up and partly nationalised the same month; the Dutch state paid €16.8bn for its Dutch businesses, merged them with the ABN AMRO operations Fortis had never absorbed, and in 2015 floated the new ABN AMRO again. Santander came out ahead by reselling: within weeks it sold Antonveneta to Banca Monte dei Paschi di Siena for €9bn — a price that later helped push that bank into its own rescues. For deal-makers it is the classic case of a break-up bid won on price and cash at the top of a credit cycle, with the financing risk carried by the buyers who kept what they bought.