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Karen Hoggan reports for BBC News
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Friday, 17 December, 1999, 21:04 GMT
NatWest hardens takeover fight


National Westminster Bank has hardened the tone of its rejection of a hostile takeover bid by Royal Bank of Scotland.

Battle for Natwest
NatWest chiefs spoke out after the Royal Bank won the go-ahead from the government to bid.

The move kick-started the battle for control of the UK's fourth-largest bank in earnest.

NatWest chairman and chief executive David Rowland said the bid would destroy value for its shareholders.

"The offers for NatWest contain the seeds of substantial shareholder value destruction," he said, in NatWest's first response to Royal Bank's formal offer document which was launched on Thursday.

No competition concerns

On the advice of the Office of Fair Trading, Trade and Industry Secretary Stephen Byers decided not to refer the RBS bid to the Competition Commission.

Mr Byers said: "I have considered the Director General of Fair Trading's advice carefully and am persuaded that the merger will not raise competition concerns in the banking sector that would warrant a reference.

"The parties face significant competition from other institutions over a range of their services and I do not believe a merger would give them a significant increase in market power."

NatWest is also battling a separate hostile bid from Bank of Scotland, which has previously been seen as more hostile than Royal Bank's approach.

Agreed deal unlikely

NatWest's decision to criticise the two bids in the same terms effectively puts both bids on an equally hostile basis.

This potentially reduces the prospect of an agreed deal with Royal Bank, which many fund managers and analysts had been expecting.

Royal Bank was seen as the "friendlier" of the two hostile bidders because it was less critical than Bank of Scotland over NatWest's performance and management.

Royal Bank of Scotland has posted its takeover offer document to NatWest shareholders, firing the starting gun in the race for control of the bank.

NatWest's plans to reform the group and remain independent have been boosted by fears that RBS's hostile merger could damage the revenues of the combined group.

Bank of Scotland's bid of 1.75 of its shares plus 190p for each NatWest share valued the takeover target at 14.02 a share or 23.4bn.

Bank of Scotland has also promised a special dividend of up to 120p a share payable once it has acquired NatWest and disposed on "non-core" businesses.

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See also:
24 Sep 99 |  The Company File
Q&A: NatWest takeover bid
24 Sep 99 |  The Company File
Timing of a takeover
27 Sep 99 |  The Company File
The UK's biggest takeovers

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