ABN Should Be Broken Up, U.K.'s TCI Fund Urges Board
By Nandini Sukumar and Adrian Cox
Feb. 21 (Bloomberg) -- ABN Amro Holding NV, the biggest Dutch bank, is ``significantly'' undervalued and should be broken up, according to TCI Fund Management, a U.K. hedge fund that two years ago led the ouster of Deutsche Boerse AG's top executives.
TCI wrote to Chief Executive Officer Rijkman Groenink and Arthur Martinez, chairman of the supervisory board, urging them to review changes to the strategy of the Amsterdam-based bank with shareholders at the annual meeting on April 26, according to Patrick Degorce, a founding partner of TCI. The London-based fund has a stake of more than 1 percent in ABN Amro, he said.
``The management should explore all options to merge, sell or spin off some of the assets or potentially the whole business,'' Degorce said in an interview yesterday. ``The assets aren't yielding their full potential and that ultimately will lead to a lack of competitiveness for the whole company, which will penalize both the stakeholders and the shareholders.''
ABN Amro's stock rose 1.48 euros, or 5.7 percent, to 27.40 euros at 10:31 a.m. in Amsterdam. The share rise is the biggest intra-day gain since May 9, 2003. The value of the parts would be ``significantly'' more than 30 euros a share, TCI said.
ABN Amro has struggled to control expenses from last year's purchase of Italy's Banca Antonveneta SpA and costs for risky loans. Groenink, 57, has raised more than 2.4 billion euros ($3.2 billion) since the start of 2006 selling assets, and booked a 371 million-euro gain in the fourth quarter from the sale of the Bouwfonds property management units.
`Hidden Value'
``We have not received an official letter from TCI yet but are aware of its content,'' ABN Amro spokesman Jochem van de Laarschot said today. ``We receive many ideas and suggestions from our shareholders and we always treat them with respect and care. These suggestions will be treated in the same way.''
Shares of ABN Amro were unchanged through yesterday since Groenink took over in May 2000, giving the bank a market value of 49.5 billion euros, according to data compiled by Bloomberg. The 72-member Bloomberg Europe Banks & Financial Services Index, which includes ABN Amro, rose a cumulative 41 percent in the same period.
``Considering that ABN Amro is performing better in respect to some colleagues it might help to unlock the hidden value of ABN Amro,'' said Rene Bastiaenen, a money manager at Eureffect BV in Amsterdam, who holds ABN Amro shares. ``Earlier some funds suggested the sale of ABN Amro's U.S. business.''
Takeover Speculation
Merrill Lynch & Co. analyst Stuart Graham added ABN Amro to Merrill's Europe 1 list of most preferred stocks today.
``If the company delivers on its headline EPS target of 2.30 euros, we think it will have broken the earnings downgrade cycle,'' Graham wrote in a note to investors. ``If management fails, we consider that takeover speculation around the stock will increase.''
ABN Amro reported a 4.9 percent increase in fourth-quarter profit to 1.36 billion euros as gains from asset sales outweighed an increase in loan losses in the U.S., Latin America and Taiwan. Profit for 2006 rose for a fourth straight year, gaining 8 percent to a record 4.72 billion euros.
TCI urged ABN Amro's managers to agree to five motions at the shareholder meeting, including a ban on any major purchases such as ``the rumored acquisition of Capitalia SpA, which has been the subject of repeated speculation in the public press.'' ABN Amro is the largest shareholder in Rome-based Capitalia, which votes tomorrow on whether to remove CEO Matteo Arpe.
The Children's Investment Fund is led by Christopher Hohn. It successfully pushed in 2005 for the ouster of former Deutsche Boerse Chairman Rolf Breuer and CEO Werner Seifert after buying enough stock with Atticus Capital to rank among the exchange's biggest shareholders. It also forced the executives to drop a 1.3 billion-pound ($2.5 billion) bid for London Stock Exchange Plc.
Quelle: Bloomberg - www.bloomberg.com/apps/...601085&sid=a7uL7f.KtQwg&refer=europe
By Nandini Sukumar and Adrian Cox
Feb. 21 (Bloomberg) -- ABN Amro Holding NV, the biggest Dutch bank, is ``significantly'' undervalued and should be broken up, according to TCI Fund Management, a U.K. hedge fund that two years ago led the ouster of Deutsche Boerse AG's top executives.
TCI wrote to Chief Executive Officer Rijkman Groenink and Arthur Martinez, chairman of the supervisory board, urging them to review changes to the strategy of the Amsterdam-based bank with shareholders at the annual meeting on April 26, according to Patrick Degorce, a founding partner of TCI. The London-based fund has a stake of more than 1 percent in ABN Amro, he said.
``The management should explore all options to merge, sell or spin off some of the assets or potentially the whole business,'' Degorce said in an interview yesterday. ``The assets aren't yielding their full potential and that ultimately will lead to a lack of competitiveness for the whole company, which will penalize both the stakeholders and the shareholders.''
ABN Amro's stock rose 1.48 euros, or 5.7 percent, to 27.40 euros at 10:31 a.m. in Amsterdam. The share rise is the biggest intra-day gain since May 9, 2003. The value of the parts would be ``significantly'' more than 30 euros a share, TCI said.
ABN Amro has struggled to control expenses from last year's purchase of Italy's Banca Antonveneta SpA and costs for risky loans. Groenink, 57, has raised more than 2.4 billion euros ($3.2 billion) since the start of 2006 selling assets, and booked a 371 million-euro gain in the fourth quarter from the sale of the Bouwfonds property management units.
`Hidden Value'
``We have not received an official letter from TCI yet but are aware of its content,'' ABN Amro spokesman Jochem van de Laarschot said today. ``We receive many ideas and suggestions from our shareholders and we always treat them with respect and care. These suggestions will be treated in the same way.''
Shares of ABN Amro were unchanged through yesterday since Groenink took over in May 2000, giving the bank a market value of 49.5 billion euros, according to data compiled by Bloomberg. The 72-member Bloomberg Europe Banks & Financial Services Index, which includes ABN Amro, rose a cumulative 41 percent in the same period.
``Considering that ABN Amro is performing better in respect to some colleagues it might help to unlock the hidden value of ABN Amro,'' said Rene Bastiaenen, a money manager at Eureffect BV in Amsterdam, who holds ABN Amro shares. ``Earlier some funds suggested the sale of ABN Amro's U.S. business.''
Takeover Speculation
Merrill Lynch & Co. analyst Stuart Graham added ABN Amro to Merrill's Europe 1 list of most preferred stocks today.
``If the company delivers on its headline EPS target of 2.30 euros, we think it will have broken the earnings downgrade cycle,'' Graham wrote in a note to investors. ``If management fails, we consider that takeover speculation around the stock will increase.''
ABN Amro reported a 4.9 percent increase in fourth-quarter profit to 1.36 billion euros as gains from asset sales outweighed an increase in loan losses in the U.S., Latin America and Taiwan. Profit for 2006 rose for a fourth straight year, gaining 8 percent to a record 4.72 billion euros.
TCI urged ABN Amro's managers to agree to five motions at the shareholder meeting, including a ban on any major purchases such as ``the rumored acquisition of Capitalia SpA, which has been the subject of repeated speculation in the public press.'' ABN Amro is the largest shareholder in Rome-based Capitalia, which votes tomorrow on whether to remove CEO Matteo Arpe.
The Children's Investment Fund is led by Christopher Hohn. It successfully pushed in 2005 for the ouster of former Deutsche Boerse Chairman Rolf Breuer and CEO Werner Seifert after buying enough stock with Atticus Capital to rank among the exchange's biggest shareholders. It also forced the executives to drop a 1.3 billion-pound ($2.5 billion) bid for London Stock Exchange Plc.
Quelle: Bloomberg - www.bloomberg.com/apps/...601085&sid=a7uL7f.KtQwg&refer=europe
