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Monday, 31 January, 2000, 18:14 GMT
NatWest battle nears end

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Battle for Natwest
The Royal Bank of Scotland has increased its offer for NatWest Group, putting pressure on rival bidder Bank of Scotland to raise its own offer before the midnight Monday deadline.

The new deal includes an extra 3.5bn in cash, and values NatWest at 24.9bn ($40bn), or 14.90 a share.

We got the message that they were looking for more cash
George Mathewson,
Royal Bank of Scotland
The Royal Bank is now offering 0.968 new shares and 400p for each NatWest share - an extra 95p in cash compared with its earlier bid.

NatWest shareholders have the option of accepting 0.92 shares and 450p cash instead.

Royal Bank chief executive George Mathewson said: "We have injected more cash into this offer in a way which does not involve dismembering the NatWest business and does not disadvantage any of the shareholders involved.

"We talked to the major institutional shareholders and we got the message that they were looking for more cash. We've tried to put something together that meets that need."


Royal Bank's biggest shareholder, Spain's BSCH, is contributing additional cash of up to 500m to back the new bid.

After all the anticipation, this is a damp squib and a risky one
NatWest spokesman
Bank of Scotland is expected to submit its own increased offer later on Monday, joining a last-minute dash for cash.

Analysts and fund managers had expected the banks to offer about 1bn of extra cash, so Royal Bank's addition of 3.5bn raises the stakes considerably.

Bank of Scotland's current offer - increased on Thursday - is worth about 14.55 a share, or 24.3bn.

Spirited defence

NatWest has insisted it would be better off retaining its independence.

A spokesman said: "After all the anticipation, this is a damp squib and a risky one. When Bank of Scotland come forward with their final offer, the board will consider both offers."

In a last-ditch attempt to fend off the takeovers, chief executive Sir David Rowland questioned the capacity of the Scottish banks to integrate the businesses.

He asked: "Did they realise that independently each lacked the management resource to integrate a business twice its size and manage a combined business three times bigger?"

"Did they realise that independently each lacked the capital and market capitalisation to pay NatWest shareholders an adequate premium backed by real value?

"We understand why Bank of Scotland's and Royal Bank of Scotland's first instinct was to seek help. And why they each found the other an unattractive partner.

Management question

"NatWest's management and board is confident in its ability to deliver - independently - shareholder value at the lowest risk."

Shareholders have until 14 February to decide whether to accept either of the bids or follow the advice of their own board and reject both offers.

At the close of share trading on Friday, NatWest's market value was 21.3bn.

While many observers will be eyeing the headline value of the bids, most analysts believe the deal hinges on the relative merits of each of the bank's management teams.

NatWest shares closed on Monday down 88 pence (6.9%) at 11.88, Royal Bank of Scotland down 58p (5.5%) at 10.02 and Bank of Scotland down 40p (6.1%) at 620p.

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See also:
27 Jan 00 |  Business
NatWest rejects new bid
27 Jan 00 |  Business
NatWest: A history
27 Sep 99 |  The Company File
Timetable of a takeover
07 Jan 00 |  Business
BoS: We will reverse NatWest decline
24 Sep 99 |  The Company File
Q&A: NatWest takeover bid
17 Jan 00 |  Business
Royal Bank of Scotland: A history
27 Jan 00 |  Business
Bank of Scotland: bold move by UK's oldest bank
19 Jan 00 |  Business
BoS promises 'major surgery' of NatWest
19 Nov 99 |  Business
NatWest bid timetable frozen
16 Dec 99 |  Business
NatWest hardens takeover fight
30 Jan 00 |  Business
NatWest mounts last-ditch defence

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