First Active investors accept RBS offer

Shareholders in First Active have voted overwhelmingly in favour of the Royal Bank of Scotland's (RBS) €887 million takeover offer.

The shareholders gave their blessing for the deal at a packed meeting in Dublin yesterday, with 98.59 per cent of votes cast approving the sale.

The transaction was dependent on a 75 per cent approval rate.

The result clears the way for First Active and Royal Bank of Scotland to bring the deal before the High Court in the middle of next month, with a view to completing the takeover in early January.

Shareholders can expect to receive cash in respect of their shares towards the end of that month.

The outcome of yesterday's meeting will not have come as a shock to those involved in the transaction, with the €6.20 per share offered by Royal Bank Scotland seen as a generous price.

Not all of the 400 or so shareholders present in Dublin's Burlington Hotel yesterday were similarly convinced, however, with a large number of speakers expressing disappointment that they were not being offered a share alternative by Royal Bank of Scotland.

The crux of their discontent appeared to lie in the 20 per cent capital gains liability (CGT) that they will face next year as a result of selling their shares in First Active.

First Active chairman Mr John Callaghan who directed the meeting, appeared surprised at this reaction, noting that the board had been "delighted" at Royal Bank of Scotland's all-cash offer.

He went on to point out that a large number of shareholders would probably not face a CGT liability because their gains would not cross the necessary threshold.

He added that if any First Active shareholders still wanted to buy Royal Bank of Scotland shares, they could do so with the cash they received in January.

He did not, however, highlight the commission payments that such transactions would attract.

Amid a generally lively exchange of views with shareholders, Mr Callaghan deflected a number of questions focusing on the future shape of the First Active/Ulster Bank entity, saying simply that it was "a growth story".

In a statement, he highlighted the "revenue and cost synergies" that could be achieved in a larger group, but failed to outline how such synergies would affect staff numbers or the size of the combined entity's branch network.

Such questions are known to be high in the minds of the bank's workers and their union, with the Irish Bank of Officials' Association having met Royal Bank of Scotland senior management to insist that the bank would not impose compulsory redundancies on staff in the enlarged company, or change workers' conditions.

The union will meet Royal Bank of Scotland again on December 19th, by which time the High Court is expected to have approved the takeover of First Active.

First Active finance director Mr Michael Torpey, who will hold the same position in the new company, said after the meeting that the level of engagement between Royal Bank of Scotland and First Active executives would be "almost nil" until the transaction is formally completed.

He indicated, however, that jobs would only be cut on a voluntary basis.

Mr Callaghan was again coy when asked by shareholders if other banks had been interested in buying First Active before the RBS deal was agreed.

He said people should concentrate on the offer that was before them.

"How we arrived at it is not relevant," he added, noting that no other bank had been prepared to pay €6.20 per share.

"We believe the world at large sees it as the best deal possible to negotiate," said Mr Callaghan.

"If you want another deal, you can reject this deal but we would see that as a crazy thing to do," he advised.