Page 434 - The Case Lab Book

"I have argued right from the start that the acquisition would destroy value for Barclays,"
remarked Chen.

Barclays' chief executive, John Varley, played a similar role in this bid battle to that of Sir Peter
Burt, who as governor of Bank of Scotland initiated and lost the battle for NatWest in 2000. BoS
was subsequently sworn into a shotgun marriage with Halifax bank and to most eyes was taken
over by its Yorkshire rival. Some observers predict a similar fate for Barclays.

Varley rejects the comparison with BoS which he says was a different business at a different
time and will console himself with a €200m break fee from ABN Amro. Varley has claimed that
the experience has left the bank stronger, internally, and better prepared for the next assault,
though there are mixed views as to whether Barclays will seek out another target or become one.

Talk of Barclays being subsumed may also be premature. The fact that its shares struggled to get
near the required 800p to match the RBS offer were an indication that there were few potential
acquirers.

Of greater significance to Barclays' future is its deal with China Development Bank and
Temasek, which manages the Singapore government's investment fund. By investing in the
British bank they provided the ammunition that allowed Barclays to sweeten its offer for ABN.
The Chinese, in particular, will give Barclays an inroad to emerging markets.

He brought in two investors late in the day to add a cash element to the deal, but even
the might of the China Development Bank and the Singaporean government investment
fund Temasek were unable to boost the bid sufficiently. The result was an offer from
Barclays that fell almost £7bn short of its rival.

"Barclays is likely to wait for a while before it looks again to acquire another large bank, but
eventually it will have to do so in order to compete in the industrialized banking market," Pierron
said.

Barclays by keeping its offer on the table prevented the consortium from altering the terms of
their offer citing material adverse events. While this was good for ABN's shareholders, it may
not have been the same for the consortium given recent events and ABN's preceived exposure to
the sub-prime debt market. Barclays in having to walk away just clutching a cheque for the break
up fee, may yet prove a blessing in disguise. If Mr Varley has some thinking to do about his
vision for the bank without ABN, at least he, unlike Sir Fred, will be able to do so without any
pins in his eyes.

THE MAN AND THE MYTHS

SIR Fred Goodwin likes to line a target up perfectly before pulling the trigger.

It could be a clay pigeon on one of his regular shooting trips, or a bank ripe for takeover, but he
prefers not to miss.