Barclays (BCS) And ABN Amro (ABN): The Art Of The Improbable

Barclays (BCS) is looking at increasing the cash portion of it bid for ABN Amro (ABN). It is already in a bidding contest with a group lead by the Royal Bank of Scotland.

Shares in ABN are up 30% since the offers began coming in. Barclays stock is up about 5%.

ABN must have been considered a moderately well-run bank. Until the run-up after the Barclays offer it had a two year stock performance almost identical to JP Morgan (JPM).

With the premium that Barclays and its rivals would pay, ABN’s shares are be up over 100% compared to where they traded a year ago. JP Morgan’s stock is only up 40%. As a matter for fact, the ABN stock is up almost as much as shares in Goldman Sachs (GS) are over that same period.

Wall St. and its army of analysts may be wrong. But, can they be that wrong about what ABN has been worth? Probably not.

And, if not, Barclays is walking into real trouble by overbidding for ABN.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.