Fortis plans 13.4 bn euro rights issue to fund ABN buy
Fortis to sell e13.4 billion ($18.8 billion) of stock to existing shareholders to fund the ABN Amro acquisition.
By Agencies |
AMSTERDAM: Fortis, part of a group seeking to buy ABN Amro Holding in the biggest banking takeover, plans to sell e13.4 billion ($18.8 billion) of stock to existing shareholders to help fund the acquisition.
Fortis will sell the shares for e15 apiece, the bank said in a statement on Friday, or 44% less than Thursday’s closing price of e26.63 in Brussels. The sale, Europe’s second-largest rights offer behind France Telecom’s e15 billion offering in 2003, will begin September 25.
“To turn the rights offering into a success in the current market you’ll have to make it attractive,” said Herman Bots, an Amsterdam-based analyst at Theodoor Gilissen Bankiers who has a ‘hold‘ recommendation on Fortis shares. He said the pricing of the stock was ‘sensible.’
Fortis offered e24 billion for ABN Amro’s Dutch consumer and commercial banks, as well as its asset-management and private-banking units, as part of a joint e71.4 billion offer with Royal Bank of Scotland Group and Banco Santander for the Dutch lender. Fortis, based in Brussels and the Dutch city of Utrecht, on Friday forecast full-year profit before asset sales of at least e4.2 billion.
Fortis received “huge support of investors” before shareholder meetings last month that approved the rights offer and the ABN Amro takeover, chief financial officer Gilbert Mittler said. The level of pricing on the offering is “fully in line with what the market expects and with previous transactions,” he said. Fortis shares rose as much or 4.7%, the most since July 2003.
The Royal Bank-led group is vying with Barclays, Britain’s third-largest bank, to acquire ABN Amro. The mostly stock bid from Barclays was valued at about e60.9 billion at the close of trading Thursday, about 15% less than the Royal Bank group’s offer.
Fortis on Friday proposed selling ABN Amro units including Hollandsche Bank Unie to secure regulatory approval for the purchase. The sales account for 10% of ABN Amro’s Dutch business, Fortis said today. A number of banks have already expressed interest in the businesses, Mittler said. At meetings in Utrecht and Brussels on August 6,
Fortis investors backed the offer for Amsterdam-based ABN Amro, which is mostly in cash, and the rights offer. Fortis sold about e1.6 billion of assets and e2 billion of notes in June that would automatically convert to securities tradable for stock should shareholders approve the rights offer. Existing shareholders will have the right to buy two new shares for every three shares they already own, Mittler said. The acquisition of ABN Amro businesses will add 2.7% to Fortis’s earnings per share in 2010, Belgium’s biggest financial services company forecast on Friday.
Merrill Lynch and Fortis are leading a group of 13 banks managing the stock sale. The acquisition of ABN Amro would be the largest financial services takeover, exceeding the $69.9 billion combination of Citicorp and Travelers Group in 1998. Under the plan, Edinburgh-based Royal Bank would take the Dutch bank’s investment banking and Asian consumer units and Santander, Spain’s largest bank, would take its Italian and Brazilian unit.
Fortis will sell the shares for e15 apiece, the bank said in a statement on Friday, or 44% less than Thursday’s closing price of e26.63 in Brussels. The sale, Europe’s second-largest rights offer behind France Telecom’s e15 billion offering in 2003, will begin September 25.
“To turn the rights offering into a success in the current market you’ll have to make it attractive,” said Herman Bots, an Amsterdam-based analyst at Theodoor Gilissen Bankiers who has a ‘hold‘ recommendation on Fortis shares. He said the pricing of the stock was ‘sensible.’
Fortis offered e24 billion for ABN Amro’s Dutch consumer and commercial banks, as well as its asset-management and private-banking units, as part of a joint e71.4 billion offer with Royal Bank of Scotland Group and Banco Santander for the Dutch lender. Fortis, based in Brussels and the Dutch city of Utrecht, on Friday forecast full-year profit before asset sales of at least e4.2 billion.
Fortis received “huge support of investors” before shareholder meetings last month that approved the rights offer and the ABN Amro takeover, chief financial officer Gilbert Mittler said. The level of pricing on the offering is “fully in line with what the market expects and with previous transactions,” he said. Fortis shares rose as much or 4.7%, the most since July 2003.
The Royal Bank-led group is vying with Barclays, Britain’s third-largest bank, to acquire ABN Amro. The mostly stock bid from Barclays was valued at about e60.9 billion at the close of trading Thursday, about 15% less than the Royal Bank group’s offer.
ADVERTISEMENT
Fortis on Friday proposed selling ABN Amro units including Hollandsche Bank Unie to secure regulatory approval for the purchase. The sales account for 10% of ABN Amro’s Dutch business, Fortis said today. A number of banks have already expressed interest in the businesses, Mittler said. At meetings in Utrecht and Brussels on August 6,
Fortis investors backed the offer for Amsterdam-based ABN Amro, which is mostly in cash, and the rights offer. Fortis sold about e1.6 billion of assets and e2 billion of notes in June that would automatically convert to securities tradable for stock should shareholders approve the rights offer. Existing shareholders will have the right to buy two new shares for every three shares they already own, Mittler said. The acquisition of ABN Amro businesses will add 2.7% to Fortis’s earnings per share in 2010, Belgium’s biggest financial services company forecast on Friday.
Merrill Lynch and Fortis are leading a group of 13 banks managing the stock sale. The acquisition of ABN Amro would be the largest financial services takeover, exceeding the $69.9 billion combination of Citicorp and Travelers Group in 1998. Under the plan, Edinburgh-based Royal Bank would take the Dutch bank’s investment banking and Asian consumer units and Santander, Spain’s largest bank, would take its Italian and Brazilian unit.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
