Royal Bank of Scotland wins biggest financial takeover

British bank Barclays withdrew its takeover offer for ABN Amro Holding on Friday, saying not enough shareholders tendered their shares.

The concession, which had been widely expected, leaves a consortium led by Royal Bank of Scotland in position to buy ABN Amro in a deal worth $99.9 billion, the largest takeover in the history of the financial industry.

Specifically, Barclays said fewer than 80% of shares had been tendered to its cash-and-shares offer, worth $88.1 billion, or $47.53 per ABN Amro share at Barclays' current share price.

The RBS bid, which closes Friday, is worth $53.88 per ABN share — 13% more than the Barclays bid.

ABN's shares were flat at $53.41.

Any shares tendered to the Barclays bid "will be deemed not to have been made," the bank said. It added that it would demand a $280 million breakup fee as a result of losing the takeover fight.

"This break fee will significantly exceed the costs that Barclays incurred" in launching its offer, the bank said.

The RBS consortium has emerged ever more clearly as the favorite to buy ABN Amro in recent weeks, as its bid was always worth more than Barclays, and it met various regulatory and fundraising hurdles.

At a shareholders' meeting on Sept. 20, ABN Amro Chief Executive Rijkman Groenink — who wanted Barclays to win — conceded that that was unlikely to happen.

"The market expects that the overwhelming majority of shareholders will chose for the consortium's bid," he said then.

Groenink had argued that the Barclays takeover was more consistent with ABN's own strategy and that the consortium bid was worth more but carried greater risks. He said it would amount to a "carve up" of ABN Amro.

Among the consortium, Fortis of Belgium wants ABN's Dutch operations, Banco Santander Central Hispano of Spain wants its Brazilian and Italian arms, and RBS wants the rest, including ABN's investment banking arm.

RBS's offer closes Friday afternoon, and it is expected to announce victory in the takeover fight, which began in March, on Monday. However, it will likely extend its offer for to allow holdout shareholders and those who tendered to Barclays to tender to the RBS bid.

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