Consortium Completes $100 Billion Acquisition
of ABN AMRO
In the world’s largest bank takeover and one of the most
complex M&A transactions ever, three Merrill Lynch clients
formed a consortium to acquire Dutch bank ABN AMRO for €71.2
billion (U.S. $100.9 billion). Merrill Lynch acted as sole advisor
to the group and raised key financing in support of the acquisition.
In its role as sole advisor, Merrill Lynch offered counsel to
the trio of banks: the Royal Bank of Scotland (RBS), Banco Santander,
Spain’s largest bank, and Fortis, a Benelux-based financial
services company. Few deals as high-profile and delicate as this
one feature a single advisor to one side in a transaction. While
Merrill Lynch alone advised the banking consortium, ABN AMRO and
Barclays each retained five investment banks.
The financing was the largest ever committed and raised by Merrill
Lynch. All together, the firm provided underwriting commitments
totaling €51 billion through the Financial Institutions Group,
Corporate Finance, Equity Capital Markets, Debt Capital Markets
and Corporate Broking.
The transaction, which included €66.7 billion ($94.5 billion)
in cash, marked the end of a seven-month-long takeover effort.
With the conclusion of one of the most high-profile transactions
of the last several years, the consortium, advised by Merrill
Lynch, surpassed the acquisition attempt of Barclays Bank, which
had launched a major takeover bid for the Dutch bank.
Rewriting Conventional Wisdom
“This is a truly historic transaction and a clear testament
to our philosophy that our clients come first,” said Andrea
Orcel, head of Global Origination. “It is about ideas and
creativity, execution prowess, focusing on what matters, adding
value to clients, taking risk for clients and Merrill Lynch’s
superior franchise across asset classes.”
Among other landmarks for the takeover was that it was the second-largest
contested transaction ever, that it was the second largest M&A
transaction in Europe and the fifth globally, and that it included
the largest amount of cash ever committed to an M&A deal.
Matthew Greenburgh, chairman of Financial Institutions, said
essential to the success of the transaction was the cooperation
of more than two dozen bankers working closely in a half-dozen
businesses, including Financial Institutions, Corporate Finance,
M&A, Equity and Debt Capital Markets, and Corporate Broking.
“We connected the dots across the breadth of the firm to
complete a highly unique transaction in terms of size, complexity
and Merrill Lynch’s role,” Greenburgh said.
Other bankers with major roles in the transaction included Henrietta
Baldock, Richard Slimmon and Meritxell Maestre from Financial
Institutions, Jim O’Neil from Corporate Finance, Barry De
Reuver from M&A, Rupert Hume-Kendall from Equity Capital Markets,
Siddharth Prasad and Steven Black from Debt Capital Markets, and
Oliver Greaves from Corporate Broking.
Intense Competition
The transaction for ABN AMRO, one of the largest banks in Europe
and with operations in 55 countries, goes back to April 23, when
Barclays announced an offer to buy the bank in an all-share deal
for €67 billion.
In response, the three consortium members, RBS, Santander and
Fortis came together and decided to offer a counter proposal.
Competition was intense for months, with ABN AMRO initially favoring
the offer from Barclays. The consortium slowly prevailed, with
major reasons being the strong underwriting commitment, a simplified
offer with only one share component and a mainly cash offer.
The takeover effort ended when 86 percent of ABN AMRO shareholders
accepted the tender offer of the banking trio.
Herculean Financing Role
Merrill Lynch ’s advisory work was only part of the transaction,
with the second part being a major financing role that included
guaranteeing the financing and raising the following:
- For Fortis, Merrill Lynch completed a Rights Issue for €13.4
billion. The transaction is the largest international equity
deal done globally and the largest single bank risk taken as
an underwriter for ECM ever.
- For Santander, Merrill Lynch participated in the process
of raising funds and assisted with a €7 billion mandatory
retail offering.
- For RBS, Merrill Lynch raised €6.2 billion equivalent
in Tier 1 capital offerings, the largest ever hybrid capital
financing. With six tranches incorporating institutional and
retail offerings, the transaction represents the largest number
of tranches and currencies of any single offering.
“This was a landmark equity offering for us and for any
investment bank,” said Hume-Kendall, chairman of EMEA Equity
Capital Markets. “People will refer to this for years to
come.”
The issue catapulted Merrill Lynch to the top of global equity
capital market league tables, moving it from sixth to first place,
according to data from Thompson Financial.
“This is the king of all hybrid capital offerings,”
said Prasad, head of Financial Institutions Capital Markets and
Financing in EMEA. “Like so much of this entire transaction,
this will be remembered for its historic significance in serving
clients.”
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