Merrill Lynch announced last month that it was severely restricting the distribution of its research to journalists. How’s that working out for them? Well, Alphaville today has got its hands on Merrill’s latest ABN Amro report, and is happy to give us the juicy details.
The problem with the Barclays bid for ABN Amro, as we all know by now, is that Barclays can’t offer the savings that other suitors, such as RBS, might be able to find. So where’s Barclays’ comparative advantage? Maybe it’s financial and regulatory. Here’s Merrill’s John-Paul Crutchley:
We find it interesting that the only formal announcement from Barclays, other than the confirmation that discussions are occurring was to announce that the Head Office and Lead Regulator would be Netherlands based. We are aware that Netherlands corporate law allows for differing classes of equity. This might give Barclays a financing option which may not be available to other bidders who are less willing to either relocate their domicile or submit themselves to a Netherlands based regulator.
The idea is that Barclays would pay for ABN using a new class of non-voting, fixed-dividend shares. This gives more upside to Barclays shareholders, and more certainty as to price for ABN shareholders.
And while we’re in the world of speculation, Alphaville also offers this:
Investment bankers believe, for example, that RBS could afford to pay more for ABN, if it then sold the bank’s Brazilian operations to another lender, such as Spain’s Santander.
ABN’s Brazilian operations are the only part of the bank showing any growth, so any buyer might be loath to sell them. But RBS has no strategic interest in Brazil, and there’s surely no shortage of potential buyers for Banco Real. Santander is only one: another obvious candidate would be Citigroup, which has proclaimed an interest in a big Brazil acquisition for years.