THEME - COUNTRY BANKING O ff the record - the diary of the deal Buying a bank is not easy, even if it's a dream deal. The challenge is to meticulously investigate a vast array of issues, from human resources through to finance, within a very short time frame. Following is a chronicle of events, from the originator of the ACC deal, RI Dublin's Fergus Murphy. He charts how industrious effort and solid teamwork got the ACC deal done. Final week, May 2001: We are formally informed that the Irish Government is about to commence the sale of ACC Bank. ACC is the third and final bank to be sold by the Irish Government as part of its banking sector divestment program. RI Dublin gets the go-ahead from the Managing Board to begin pre due dili gence and draft an initial business case for Rabobank to acquire ACC Bank. Mid June 2001: The business case proves persuasive. We have evidently picked a match between the two banks, ivith regards to their agrarian past and strategie plans for the future. With the Managing Boards approval we put forward a non-binding offer for ACC. End of July 2001: Pieter van der Weijden is appointed as RI International Retail Director. We commence a more indepth strategy paper. Tbis 100 page document is presented to RI's Managing Board, lt includes a backdrop to the market, a scrutiny of factors Rabobank should be watchful for and recommendations concerning how ACC might fit within the Rabobank Group. July 8c August 2001: RI and Rabobank Nederland people from across the network - from Credit, Compliance, Human Re sources, Risk, Operations, Treasury, Audit, Taxation and Legal join us in Dublin for the due diligence process. Around 20 peo ple meet daily in ACC's lawyers offices to examine its business in detail. Many of these people manage admirably to fulfil their regular duties in addition to assisting with due diligence. Late evening de-briefing sessions to revise and strategize are dutifully accepted by those involved. During this period thorough research uncovers a number of areas which might affect the valuation of the company; these included some legacy compliance and credit issues, which the bank had during the 1990s. In fact, numerous banks in Ireland had similar problems, however, ACC's seem greater for its small size. Previous poor lending experiences are also reviewed and subject to our keen inspection. We are pleased to note that the management of ACC has already initiated a change program to restucture the bank, addressing many of these significant issues. This program and a voluntary seperation scheme already underway are judged very positively by the Rabobank team. September 6, 2001: Phase one of due diligence is finished and the final investment proposal is submitted to the RI Managing Board. Significant outstanding issues, concerning credit and human resources demand a further month of due diligence. It is taking a huge effort to keep the show on the road. I am grateful to my hardworking team who have taken on extra volumes of work. Every single detail is scrutinized. Eventually the due diligence information indicates that we should move ahead. October 17, 2001: A formal letter of offer to buy ACC is submitted to the Irish government and price negotiations begin. This too is a period of extremely exhausting work. Ideally you want to delegate all regular responsibilities in order to solely focus on the acquisition project, however this is not possible. At times it is touch and go and looks like the deal might be off- another party is interested. They're willing to pay more but want to restructure the bank, butchering jobs and assets. Although we are offering less money, we may be the favorable choice for the government because we wilI support the volun tary separation scheme already in place and we have the inten- tion to grow the bank's business. In addition, our Triple-A rating, top 25 position in the world and culture of sustainability and social awareness, stand us in good stead with the Irish government and their advisors, NCB Corporate Finance Ltd. December 3, 2001: After countless conversations, working late night after night, we finally agree a price and contract for the acquisition. A number of deal sweeteners are obtained by Rabobank from the government through this jnocess, but it's been a very volatile process and a great learning experience. 'The devil is in the detail' as we all find out. December 4, 2001: At 7 a.m. in the morning, having worked throught the night with a team of lawyers and corporate finance advisers, we sign for the purchase of ACC - to be executed on February 28, 2002. March, April, May 8c June 2002: An extensive set of comple- tion accounts, upon which the final valuation of the bank will be agreed by both parties, is painstakingly prepared. However, the Net Asset Value (NAV) comes in much higher than we expect. The government want us to pay 1 million for every 1 million in increased NAV. So begins a series of informal arbitra- tion. We seek to reconcile the completion account numbers and the year end audit numbers to protect Rabobank 's position, very much feeling that the deal could turn sour at any time and end up in a messy and costly adjudication process. July 4, 2002: Finally we agree on the extra amount to be paid. It's a fantastic deal because we are buying the bank for about 90 percent of its NAV and we have maintained a good relationship with the government. The acquisition is now finally complete. Celebrationary cheers and a few pints ofwell earned Guinness. We draw a line under the project, feeling a little older and wiser and quite proud. 10 I RI The Word I

Rabobank Bronnenarchief

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