Tuesday, September 10, 2019

Case Study of a Merger and Acquisition case Essay

Case Study of a Merger and Acquisition case - Essay Example cussed above that this acquisition was done through an RBS led bank consortium comprising of The Royal Bank of Scotland, Fortis Group NV of Belgium & Santander Central Hispano SA of Spain.(Forton,2007). However, during this whole process during which the efforts to acquire the bank were undertaken, Barclay’s- one of the oldest banks in UK- also remained active for the acquisition of the bank. It is also important to note that negotiations between Barclays and ABN Amro were almost finalized and Barclays was on its way to become the largest banking group in the world worth  £94 Billion however, due to certain legal complications and higher bid by RBS led consortium, the deal between Barclays and ABN Amro could not be materialized. The actual deal between both the firms was to be materialized through 70% of the cash and 30% of the RBS shares given to ABN Amro shareholders. Since this deal was brokered through a consortium therefore as per the mutual understanding of the consortium members, the operations of ABN Amro were to be divided. The Royal Bank of Scotland- as the main player in the deal- therefore planned to take over the Chicago operations of the bank, its wholesale operations while other two banks would take its Brazilian as well as Dutch operations. Barclays in its bid also agreed to shift its headquarters to Amsterdam and was even ready to cut most of its UK workforce as a part of the deal. However, RBS was able to attract the attention of investors because of high value of cash involved in the overall deal. RBS promised to pay  £16 Billion for the wholesales operations of ABN which was considered as 32 times higher than the profits of that segment of the business. At that time, it was considered as the bargain as RBS was banking on the possibility of cost saving through restructuring of the operations. Both ABN and RBS were working in the same industry at the time of acquisition and the industry as a whole was faring well. It is also however,

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