LONDON/AMSTERDAM: British bank Barclays Plc has agreed to buy Dutch rival ABN AMRO for about 67 billion euros ($91 billion) in shares as it fights off rivals to clinch the world's biggest bank takeover.

Barclays said on Monday it would pay 3.225 new shares for each ABN share, equivalent to 36.25 euros a share at Friday's closing price but less than that on Monday, to create the world's fifth biggest bank, with a market capitalisation of over $190 billion and 47 million customers across the globe.

The deal is widely seen as a test case for larger bank mergers in Europe's consolidating banking and financial sector, and part of a wave of mega-bank mergers that began in the U.S. several years ago.

ABN will sell its Chicago-based U.S. bank LaSalle to Bank of America for $21 billion in cash, and the deal with Barclays will be conditional on LaSalle's sale, the banks said.

The two banks said a merger would result in 3.5 billion euros of annual synergy benefits, largely from cost cuts, including 23,600 job reductions or just over 10 per cent of the combined workforce. Just under half of the positions being cut will move offshore.

The price tabled by Barclays is broadly in line with what analysts had expected the bank to offer and represents a 33 per cent premium to ABN's price before the banks announced talks, though some analysts said on Monday it was too low.

"It's a dream fit,'' Barclays Chief Executive John Varley told reporters at an Amsterdam news conference.

Asked if he was willing to pay more, Mr. Varley said, "We have put a good price to ABN shareholders.''

There is a chance of a higher bid from a rival trio of suitors, led by Royal Bank of Scotland. RBS, backed by Spain's Santander and Dutch-Belgian group Fortis, is due to meet ABN later on Monday. ABN Chairman Rijkman Groenink told reporters that the ABN board would hear other offers but said a Barclays merger was the "best option'' for shareholders.

"That does not mean we do not listen to shareholders, if they think there is something else very serious and more compelling on the table,'' he told reporters on a conference call.

The banks will distribute about 12 billion euros to shareholders through buybacks after the sale of LaSalle.

Barclays' Mr. Varley and President Bob Diamond will have the same positions in the enlarged group, and ABN's Arthur Martinez will be Chairman. Mr. Groenink will become a non-executive director and Mr. Varley said he would move to Amsterdam. The combined bank will be a registered company in the U.K. with headquarters in Amsterdam, and dual-listed on the London and Amsterdam stock exchanges. Barclays shareholders will own about 52 per cent of the company, to be called Barclays Plc. Barclays' current Chairman, Marcus Agius, will become Deputy Chairman and take over the top job at Mr. Martinez's retirement. — Reuters

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