Atticus urges Barclays to drop ABN takeover

Published on Monday 11 June 2007 12:05

ATTICUS Capital, the New York-based hedge fund, today urged Barclays to drop its agreed takeover for Dutch bank ABN Amro.

The group, which is thought to have around a one per cent stake in Britain's third-biggest bank, claimed that progressing the bid would harm management credentials, anger shareholders and see it pay an inflated price for ABN.

The call is the latest development in the battle to pull off the world's biggest banking takeover, which sees Barclays - which has an agreed 43 billion takeover deal with ABN - pitted against an RBS-led consortium offering around 48bn.

However, the RBS offer is dependent on ABN unwinding its separately-agreed deal to sell its US-based LaSalle unit to Bank of America for 10.5bn and including it in the total ABN package.

A Dutch court froze the LaSalle sale after ABN shareholders successfully argued that the bank should have sought their approval before signing the deal. The Dutch appeal court will rule further next month. It emerged today that in a letter sent to Barclays chairman Marcus Agius, Atticus chairman Timothy Barakett outlined his view of Barclays' offer.

The letter said Barclays was looking to buy "an inferior business in an auction at inflated prices". It also said the bid would "harm management's credibility and anger shareholders". And it threatened to lobby other investors. But Barclays refuted Atticus' claims and said it had met shareholders to garner views on its move for ABN.

"The views expressed by Atticus Capital are not representative of the feedback we have received from shareholders who remain supportive of our strategy," Barclays said, according to a report in the Financial Times.

"If other shareholders feel differently, we encourage them to engage in a dialogue with us. We believe this transaction will create significant incremental value for our shareholders and meets our rigorous financial criteria."

The bank declined to comment further today. But major shareholders in Barclays appear to be firming behind the view that it should not increase its bid.

It is understood that around ten per cent of Barclays shareholders are of the view that they will not oppose the bid as it stands - but will do so if it raises its offer.

"If Barclays raises the bid it will look desperate," said one major shareholder, adding the RBS and its consortium partners Fortis and Banco Santander had a "much stronger story".

Another said that potential cost synergies stemming from a successful RBS bid, put it in a "much better position".

Over recent weeks, Barclays has been meeting with key investors. Last week Mr Aigus and Bob Diamond, chief executive at Barclays Capital (BarCap), met with management at Atticus to try and convince the hedge fund to lend its support.

Atticus believes that Barclays would be better pumping further cash into it strongly-performing BarCap, its investment bank unit, and asset management arm Barclays Global Investors (BGI), or else return surplus cash to shareholders. Barclays expects to publish its formal offer in July after it said recently that it was making "excellent progress" with the key regulatory filings required to proceed with the takeover.