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New York Times: Two Banks Weighing Deal Outline Motives for Merging

  
By REUTERS
Published: March 21, 2007

LONDON, March 20 (Reuters) — The British bank Barclays and a Dutch rival, ABN Amro, said Tuesday that after a merger, their company would be listed in London, have its headquarters in Amsterdam and would split the top two jobs.

John Varley, chief executive of Barclays, would take the same job in a combined bank, and ABN’s chief, Rijkman W. J. Groenink, would probably be chairman under the proposals, the companies said.

Barclays and ABN also outlined a framework of objectives they aim to reach agreement on, including using the Dutch Central Bank as lead regulator and having a British board and governance and management structures.

The banks are in exclusive discussions about creating a company worth more than $160 billion, a result of the biggest financial services deal ever. If the deal is agreed to, Barclays will probably pay more than $80 billion for its rival, mostly or all in shares, analysts said.

The two are said to be trying to reach agreement within 30 days.

The framework outlined would be similar to that of the oil company Royal Dutch Shell, which is also incorporated in Britain but uses the Netherlands as its headquarters and tax base.

The primary listing would allow the combined bank to be included in the FTSE 100-stock index, which was the motive for Shell’s structure.

Shares in both banks jumped during the day as investors endorsed the logic behind the deal and the prospect that either could attract other takeover offers if the talks failed.

Analysts said Barclays appeared to be making some concessions to ABN, which may reduce the need for it to offer a lofty premium and showed it was not dictating terms on the deal.

The plan to complete a deal within a month would take the talks close to ABN’s annual shareholder meeting on April 26, when it is to address calls by some investors, including the Children’s Investment Fund, a British hedge fund, to consider a sale or breakup.

Banks including the ING Group, Banco Bilbao Vizcaya Argentaria and BNP Paribas have also recently been interested in all or part of ABN, and analysts say that HSBC Holdings, Royal Bank of Scotland and Banco Santander might all pay a higher price for ABN.

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