Rivals to Bid in Hedge Fund Driven Dutch Bank Sale

The Royal Bank of Scotland Group and Spanish bank Grupo Santander Central Hispano of Madrid are combining their efforts to counter bid Barclays in the hedge fund driven sale of Dutch bank ABN.

ABN Amro Holding was in preliminary discussions with Barclays about creating a company worth more than $177 billion, this would be a record deal in the financial sector. In March hedge fund TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business.

Activist hedge funds and shareholders Polygon and Centaurus backed up TCI's demands by increasing their stakes in ABN in order to pressure the bank into the sale. According to a British newspaper report, the offer could be presented immediately after Barclays makes a formal bid for the bank and would involve a break-up of the Dutch bank.

In 2005 TCI was part of a group of activist investors who criticized Deutsche Börse for its $2.5 billion bid for the London Stock Exchange, eventually causing Werner Seifert, the chief executive to resign. It turns out TCI, which owned 8% of Deutsche Börse, actively recruited some powerful partners, including Atticus Capital, Merrill Lynch, and Fidelity Investments, in order to facilitate the move.

Centaurus is one of the activist shareholders that was embroiled in a dispute with Dutch companies Stork NV and Royal Ahold NV last year, and Polygon Investment Partners is a British equity fund that was involved in the sale of Dutch publisher VNU.