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Royal Bank Hikes Offer for NatWest

January 31, 2000

LONDON (AP) _ The Royal Bank of Scotland PLC raised its hostile takeover bid for National Westminster Bank PLC in a last-minute attempt to beat rival Bank of Scotland for control of the English bank.

The Royal Bank valued its new offer of cash and stock announced Monday at $40.47 billion, up from its earlier bid of about $35.8 billion.

The Royal Bank’s move followed an improved offer Thursday by the Bank of Scotland, which said then that its offer valued NatWest at $39.2 billion.

Both banks have until the end of Monday to post final offers to shareholders under terms set by regulatory authorities in the battle for NatWest.

It was not immediately clear whether the Bank of Scotland would make a new bid Monday. The Royal Bank described its offer as final, but said it reserved the right to change it `if a new competitive situation arises.″

The Royal Bank’s new basic offer to shareholders is 0.920 shares in the new merged company and $6.48 in cash per NatWest share _ a 17 percent premium on Natwest’s closing share price Friday of $20.67.

The new bid included a commitment of an extra $810 million from a Spanish bank, Banco Santander Central Hispano, which is the Royal Bank’s largest shareholder with 9.64 percent.

The extra funds from the Spanish bank _ in exchange for Royal Bank shares _ would be used to pay shareholders who opt for a cash alternative in the new offer.

``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,″ said Royal Bank Chief Executive Sir George Mathewson.

NatWest derided the new offer.

``After all the anticipation, this is a damp squib and a risky one,″ the bank said in a statement. ``When Bank of Scotland comes forward with their final offer, the board will consider both offers.″

Shares in all three banks fell Monday on the London Stock Exchange. But some analysts blamed general weakness in banking shares because of fears of interest rate rises, rather than the takeover battle.

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