Is ABN Amro (ABN) Too Expensive Yet

Like two poker players who have been up for 36 hours straight, RBS and Barclays (BCS) keep upping their bids for ABN Amro (ABN),

Barclays will use money raised from China Development Bank and Temasek Holdings to up its bid to $93.34 billion. That is still a bit below the RBS bid, but, according to The Wall Street Journal “Barclays is counting on an increase in its stock price to close the gap”. Why that would be true is anyone’s guess. Raising its bid for ABN should lower Barclays stock. But, that is their problem.

Temasek, which is controlled by the government of Singapore ad China Development Bank will buy shares in Barclays to help the UK bank fund its takeover. What happens if the ABN bid does not work is unclear.

At some point the price of ABN may become to high. Or perhaps that has already happened.

Douglas A. McIntyre