Fund tells Barclays to drop its ABN bid

Atticus Capital, an activist hedge fund with a 1 per cent stake in Barclays, has called on the UK bank to drop its agreed bid for ABN Amro, warning it will vote against it if Barclays proceeds.
In a June 1 letter to Marcus Agius, Barclays’ chairman, Timothy Barakett, Atticus’s chairman, and David Slager, vice-chairman, wrote that the hedge fund viewed the all-paper deal as an offer to buy “an inferior business in an auction at inflated prices”. They said Atticus would seek to persuade other investors, and that further efforts to buy ABN would “harm management’s credibility and anger shareholders”.
Barclays said: “The views expressed by Atticus are not representative of the feedback that we have received from shareholders who remain supportive of our strategy.” It said the bank had met more than 50 shareholders.
Separately, it has emerged that several of Barclays’ biggest UK-based shareholders are warning the bank not to raise the price it is prepared to pay for ABN. Holders of more than 10 per cent of its shares privately say that although they are not opposing the bid at current levels, they will do so if Barclays raises its offer for the Dutch-based group.
The growing shareholder disaffection throws doubt over Barclays’ ability to complete the deal because it might need to improve its offer to beat the €71bn rival cash-and-shares approach from a consortium of banks led by Royal Bank of Scotland. Barclays has offered €64bn for ABN, payable entirely in shares.
However, the rival bid is dependent on the ability of the consortium, which includes Santander of Spain and Fortis, the Belgo-Dutch group, to nullify or amend a deal that ABN struck with Bank of America to sell LaSalle, its US subsidiary, for $21bn. That decision is subject to a Dutch supreme court ruling in July.
Barclays has been meeting its shareholders in recent weeks to discuss the deal and some have privately expressed support. “We do not think their [Barclays’] assumptions about synergies are particularly aggressive,” said one large investor.
Separately, Mr Agius and Bob Diamond, chief executive of Barclays Capital, met Atticus last week to try to persuade it of the merits of its deal.
Mr Slager said that those meetings had not changed his mind. Atticus would like Barclays to invest in its two “best in class” businesses, BarCap and BGI, or else return excess capital to shareholders.
The criticism mirrors some of the concerns of Barclays’ UK-based shareholders.
“If Barclays raises the bid it will look desperate,” said a top 10 shareholder. “RBS has a much stronger story.”
Another said: “There is a lot of disaffection for Barclays’ bid. It doesn’t have the obvious cost and revenue overlaps. The consortium is in a much better position.”