(Adds Bank of America reaction)
By Reed Stevenson and Gilbert Kreijger
AMSTERDAM, May 3 (Reuters) - A Dutch court told ABN AMRO AAH.AS on Thursday to freeze its $21 billion sale of U.S. unit LaSalle Bank, dealing a blow to its agreed takeover by Barclays Plc (BARC.L) and making it easier for a rival group of suitors to bid for the whole of ABN.
Barclays said it would push ahead with its $88 billion merger with ABN, which has the blessing of ABN’s management, but sources familiar with the matter said the Royal Bank of Scotland Group Plc would go forward with a counter-bid for LaSalle against the $21 billion being offered by Bank of America Corp. (BAC.N) in order to clinch the Netherlands’ biggest bank.
Judge Huub Willems’ decision at the Dutch commercial court, delivered to a packed courtroom in a canal-side building in Amsterdam, could trigger a complicated legal battle.
Bank of America said after the ruling it would take “all necessary steps” to protect its legal rights over LaSalle. Bank of America is entitled to a potential $200 million break-up fee if the LaSalle deal is scrapped. Barclays also may sue if its deal flounders, sources familiar with the matter said.
Investors, hedge funds and RBS, along with its consortium partners Santander (SAN.MC) and Fortis FOR.BR, had demanded that ABN put the LaSalle deal to a shareholder vote since it made it difficult for others to counter-bid for the whole of ABN.
The consortium has said that it is willing to pay as much as 72 billion euros for all of ABN, and will be allowed under Dutch regulations to make a public offer for the company as early as Friday.
Dutch investor group VEB, with the support of shareholders representing up to 20 percent of ABN’s shares, took its case to the Dutch commercial court in Amsterdam Saturday, asking for an injunction against the sale of LaSalle.
“This is a great, great victory for shareholders,” said Peter Paul de Vries, the VEB’s chairman.
ABN Chief Executive Rijkman Groenink had argued that the structure of the deal with Barclays and Bank of America, where rival bidders were encouraged to place offers for both ABN and LaSalle, was the best way to deliver the highest price for ABN to shareholders.
Any deal to buy ABN would be the biggest banking merger ever. Barclays wants to increase its exposure to fast growing markets in Brazil and Asia while the consortium would seek to beef up operations in Europe, a sector ripe for consolidation.
ABN, which has until June 14 to appeal, had argued the sale of LaSalle was not a “major transaction” requiring approval, as it amounted to less than a third of the bank’s total value.
The notice period needed for a shareholders’ meeting at ABN is a minimum of 15 days, meaning the sale could now be on hold for as least that long.
Analysts said the decision gave the RBS-led consortium more time to put together a bid — as the May 6 deadline on counter-bids for LaSalle would apparently no longer stand — but most said they still expected an offer within days.
RBS will most likely make its offer for ABN conditional on LaSalle being included in the deal, sources familiar with the matter said.
At a chaotic shareholders’ meeting last week, investors grilled Groenink and Chairman Arthur Martinez over the deal with Barclays and Bank of America, saying that they wanted to be able to choose the highest bid for their shares.
The decision to freeze the LaSalle sale and consider an investigation into the decision processes behind it is a clear blow for ABN’s Groenink, who said the Barclays bid was an offer that would build and not break up the Dutch bank.
De Vries said he expected Groenink to be replaced within a day: “Groenink is not the person who should lead this process or be CEO of the bank,” De Vries said.
Groenink was not at Thursday’s ruling.
Martinez is the former chairman and chief executive officer of Sears Roebuck & Co. which merged with Kmart in 2005.
Activist hedge fund TCI, whose campaign to break up ABN earlier this year accelerated the takeover battle, welcomed the court decision, and also renewed its call for the supervisory board to sack Groenink and take control of the bank’s sale.
“In light of this decision we reiterate our call for Mr. Arthur Martinez, as Chairman of the ABN AMRO Supervisory Board, to immediately assume full control of the sales process,” TCI said.
ABN AMRO shares closed up 1.9 percent after the ruling at 36.6 euros — below RBS’s proposed 39 euros a share but above the 35.8 per share value of a Barclays bid.
Barclays shares ended the day up 3 percent.
“It wasn’t the greatest deal for them (Barclays), and people weren’t sure on the cost synergies,” Tania Gold, analyst at Dresdner Kleinwort in London said.
A spokesman for ABN declined to comment, saying that the ruling spoke for itself. Fortis also declined comment.
** For more analyst views on the case, click on [nL03144874] (Additional reporting by Steve Slater, Clara Ferreira Marques and Anshuman Daga in London, Emma Davis in Brussels, and Christian Plumb in New York)