BNP Paribas To Acquire Fortis Finally

Having failed in court to block a takeover by a big French bank, angry shareholders at Fortis, once Belgium’s biggest bank, tried to vote with their feet on Tuesday — or, more precisely, their shoes.

At an often-chaotic general meeting in Ghent on whether to sell the down-at-the-heels Belgian company to BNP Paribas, Fortis shareholders scuffled with management, pelting them with shoes and coins and twice bringing proceedings to a halt, The New York Times’s David Jolly reported.

But the Fortis chairman, Jozef De Mey, pressed ahead and the proposal passed with 72.99 percent backing, clearing the way for a final vote Wednesday by Dutch shareholders, more than six months after the deal was mooted.

To call it contentious would be a serious understatement. It brought down one government in Belgium and was rejected twice by shareholders, who charge they are being sold short by politicians anxious to be rid of the money-losing bank. Fortis last month reported a 2008 net loss of 28 billion euros, or $37 billion.

Fortis, with a dual ownership structure in the Netherlands and Belgium, was once the pride of the Belgian financial establishment, its blue-chip shares widely held by local investors.

But it was ultimately undone by the debt it took on in 2007 at the height of the credit bubble, when it joined Royal Bank of Scotland and Banco Santander in acquiring the Dutch bank ABN Amro for 71.9 billion euros, about $94 billion at current exchange rates, the biggest banking takeover in history.

The collapse of the company in October, when it was broken up and taken over by the Dutch and Belgian governments, wiped out 95 percent of the Belgian unit’s share price. The stock was suspended Tuesday pending the vote. Shares of BNP fell 3 percent in Paris.

The Netherlands government nationalized the Dutch operations on Oct. 3, paying shareholders 17 billion euros.

The Belgian government is seeking to sell 75 percent of the banking unit to BNP Paribas, which agreed to pay in shares in a deal worth about 3.7 billion euros at BNP’s current share price. BNP would also take a 25 percent stake in Fortis Insurance for about 1.4 billion euros in cash.

The Belgian prime minister, Herman Van Rompuy, who took office after the previous government collapsed over allegations of political meddling in the deal, had warned that the bank would probably stay in government hands for years if the BNP Paribas sale did not go through. He welcomed Tuesday’s result and expressed “total confidence” that Dutch shareholders would approve it as well.

Fortis officials could not immediately be reached for comment, The Times said. A spokesman for BNP told the newspaper that the French bank would not comment before the final vote.

Shareholders had taken the initial carve-up to court last year and won the right to put it to a vote. In February, they voted it down, forcing the government and BNP Paribas to sweeten the deal.

In the latest maneuvering, some long-time shareholders wanted to block newer investors from voting, including hedge funds, who hope to turn a quick profit after snapping up shares at their recent lows. But a Belgian appeals court ruled against them on April 10, saying all shareholders of the bank could vote on the deal.

Another last-ditch legal maneuver failed late Monday, which led to Tuesday’s uproar.

“It wasn’t the vote on BNP Paribas itself,” Laurent Arnauts, an lawyer with the corporate law firm Modrikamen, which is leading battle against the deal, told The Times. “Rather it was the principle of allowing about 25 percent of the shares to be voted without a declaration of ownership.”

Speaking by phone from inside the meeting, he said that the shares in question appeared to be held anonymously in tax havens, and that he believed they were held by allies of BNP. But a judge had refused to suspend their voting rights, and management refused to put the question to the shareholders meeting Tuesday.

Fortis executives can only look ahead with dread to the second day of the shareholder vote, Wednesday, in Utrecht, the Netherlands, a country known for wooden shoes.