Royal Bank of Scotland Takes Lead in NatWest Bid

Strategic Insights -

In a dramatic turn of events, Royal Bank of Scotland appeared to have taken a substantial lead in its bid for National Westminster, with a source close to the bid process indicating that the bank had already won the support of shareholders owning more than 20% of NatWest. Schroders, NatWest's third-largest shareholder with 3.3%, declared its official support for Royal, while Mercury Asset Management (MAM), the second-largest shareholder with about 4.5%, was said to be backing Royal as well.

Key Takeaways:

  • Royal Bank of Scotland has secured the support of shareholders owning more than 20% of National Westminster, including Schroders with 3.3% and MAM with about 4.5%.
  • The combined support of these two shareholders, along with other unnamed institutions, totals near 8%, surpassing Royal's earlier claimed 12.88% support figure.
  • Bank of Scotland questioned the reliability of Royal's 12.88% figure and threatened to complain to the Takeover Panel.
  • Royal Bank of Scotland's bid now has virtually identical headline values to Bank of Scotland's, with Royal's shares outperforming those in its rival yesterday.
  • Bank of Scotland proposed a merger with NatWest, offering jobs to the bank's top management team, including chairman Sir David Rowland, in an attempt to win support from NatWest's shareholders.
  • The Scottish bank's conciliatory gestures toward Sir David were seen by a senior source in Royal's camp as a sign of desperation to win the bid.
  • NatWest claimed Bank of Scotland was "hijacking" its management, as well as potential cost savings, in an attempt to persuade NatWest's board to recommend its bid to shareholders.

Statistics:

  • Royal Bank of Scotland's bid is now worth 1429p-a-share or £23.8billion.
  • Bank of Scotland's bid is now worth 1419p-a-share or £23.7billion.
  • NatWest shares gained 52p to 1144p, but remain well adrift of the offer values.
  • Mercury Asset Management owns approximately 4.5% of NatWest shares.
  • Schroders owns 3.3% of NatWest shares.
  • Deutsche Asset Management pledged to vote its 1.4% stake in NatWest in favour of Royal's bid yesterday.

Sources:

  • A source close to the bid process
  • Schroders
  • Mercury Asset Management (MAM)
  • Deutsche Asset Management
  • Philips & Drew Fund Management (PDFM)
  • The SNP's Shadow Minister for Finance, Andrew Wilson
  • Bank of Scotland's corporate affairs director, Alex Pagett