$99 billion purchase of ABN Amro – suicidal!
To every proverb, there is an anti-proverb; and in capitalism too! Here’s what Fred Goodwin (CEO, RBS) said about the October 2008 purchase of ABN Amro, “We are happy we bought what we thought,” and this was the anti-statement from Philip Hampton, Chairman, RBS, “The ABN Amro acquisition can’t be undone… it was the wrong price, the wrong way to pay, at the wrong time and the wrong deal!” The two contradictory statements in a way, say it all. The consortium (RBS, Fortis and Santader) with synergy expectations of €2.28 billion annually, ended up overvaluing the financial entity and paid 3x of book value, a blood-freezing $99 billion; and this came at a time when other banks were trading at book value! ABN Amro had sold its LaSalle Unit to BofA, therefore it made no sense for the consortium to pay such a hefty sum for the under performing bank with emaciated Asian operations. It all came down to one reason – ego; of not allowing Barclays to win. Wrong price, wrong value, wrong time & well... a completely wrong deal.
To every proverb, there is an anti-proverb; and in capitalism too! Here’s what Fred Goodwin (CEO, RBS) said about the October 2008 purchase of ABN Amro, “We are happy we bought what we thought,” and this was the anti-statement from Philip Hampton, Chairman, RBS, “The ABN Amro acquisition can’t be undone… it was the wrong price, the wrong way to pay, at the wrong time and the wrong deal!” The two contradictory statements in a way, say it all. The consortium (RBS, Fortis and Santader) with synergy expectations of €2.28 billion annually, ended up overvaluing the financial entity and paid 3x of book value, a blood-freezing $99 billion; and this came at a time when other banks were trading at book value! ABN Amro had sold its LaSalle Unit to BofA, therefore it made no sense for the consortium to pay such a hefty sum for the under performing bank with emaciated Asian operations. It all came down to one reason – ego; of not allowing Barclays to win. Wrong price, wrong value, wrong time & well... a completely wrong deal.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
