The Dutch Supreme Court will issue its ruling on ABN AMRO's suspended sale of its U.S. unit LaSalle on Friday and the decision could sway an acrimonious takeover battle for the Dutch bank.
The court is considering whether to unfreeze the suspended sale of LaSalle Bank to Bank of America for $21 billion. The smaller bank's fate could tip the balance in a deal potentially worth nearly $100 billion which would be the biggest-ever bank takeover.
Britain's Barclays, which has offered to buy ABN for nearly 63 billion euros ($86 billion), is up against a consortium of three banks led by Royal Bank of Scotland which says it is willing to pay 71 billion euros ($97 billion).
Barclays' all-share offer for ABN is backed by ABN's management but is contingent on the sale of LaSalle. The consortium, on the other hand, has said LaSalle must remain part of ABN as a condition of its offer, which is partly in cash.
Most analysts believe the Dutch Supreme Court will take the advice given two weeks ago by the Dutch Advocate General, who was tasked to give an opinion on the case and said ABN should be allowed to sell LaSalle without a shareholder vote.
The sale of LaSalle to Bank of America was frozen in early May after a commercial court in Amsterdam said ABN should have asked shareholders for approval for the deal, even if it was not required to do so under legal regulations.
ABN, as well as Bank of America, appealed the commercial court's surprise decision and the Dutch Supreme Court agreed to expedite its deliberation on the case.
The Supreme Court said on Tuesday it would rule on the case on Friday, July 13 at 0800 GMT.
Ahead of the ruling, ABN confirmed on Tuesday that it was cooperating with a NYSE Euronext investigation into trading in its stock around the time in March when ABN said it was in talks with Barclays, first reported by the Wall Street Journal.
We are fully cooperating with the request, an ABN spokesman said.
Barclays wants to buy ABN to create an Anglo-Dutch bank, while RBS and its partners Santander and Fortis plan to split ABN amongst themselves.
ABN shares were down slightly by 0.3 percent, at 34.55 euros at 0810 GMT, while Amsterdam's blue-chip index posted a modest 0.3 percent rise.
Most analysts expect one of three rulings.
The court could unfreeze the LaSalle sale, making it likely Bank of America will buy the Chicago-based bank.
Although many analysts contacted by Reuters declined to be polled on the likely outcome, most indicated they expect the court to say ABN can go forward with the sale without a shareholder vote.
History shows that, in the majority of cases, the Supreme Court tends to follow the advisory opinion of the Advocate General, Dresdner Kleinwort analyst Tania Gold said in a client note.
That would start the clock again on an ABN-Barclays merger while putting pressure on the consortium to revise its bid to exclude LaSalle.
We expect the consortium to review its bid (with Fortis as lead), for at least an equivalent price, said Oddo Securities analysts in a research note.
The court could uphold the commercial court's ruling and require ABN's shareholders to vote on LaSalle, which could effectively be a referendum for Barclays or the consortium.
The court could send the case back to the commercial court, or propose a compromise between the parties, which would most likely result in further legal wrangling and uncertainty over the fate of ABN.
HSBC analyst Matthew Czepliewicz warned in a note just after the Advocate General's opinion that continued uncertainty over ABN's fate could start to hurt its business.
The uncertainty caused by a contested corporate bid can, and often does, lead to a marginal erosion of business in the target company, Czepliewicz said.
For a summary of the possible impact scenarios on ABN from the ruling, see (ID:nL0911797: Quote, Profile, Research).
After the ruling, Barclays and the three-bank consortium are facing a July 23 deadline to file formal offers for ABN.