Kaupthing drops €3bn NIBC acquisition

US buyout firm JC Flowers has been unable to sell the Dutch bank, despite agreeing a deal in August. The cancelled deal may dampen Flowers’ interest in UK bank Northern Rock and UK insurer Friends Provident.

Icelandic bank Kaupthing has abandoned its €3 billion ($4.45 billion) acquisition of NIBC, the Dutch bank owned by US buyout firm JC Flowers, according to a statement.

Christopher Flowers:
no NIBC sale

Kaupthing cited the current instability in the financial markets as its reason for abandoning the bid.

The deal was agreed in August just before the full extent of the problems in the credit market became apparent.

It had been agreed at a 12.7 times multiple of NIBC’s income and at 1.5 times to shareholder equity as at 30 June 2007.

Kaupthing had been planning to fund the purchase with a share issue, which has been cancelled.

The Icelandic bank’s decision may render problematic Flowers’ renewed interest in troubled UK bank Northern Rock and in UK insurer Friends Provident, according to media reports.

This week the Flowers consortium buying Sallie Mae managed to walk away from its $25 billion (€16.8 billion) bid without paying the deal’s $900 million breakup fee despite the threat of legal action.

Flowers’ partners Bank of America and JPMorgan Chase offered to lead the $30 billion refinancing of Sallie Mae’s debt that was due in February. Barclays Capital, Deutsche Bank, Credit Suisse, the Royal Bank of Scotland and UBS will also participate in the refinancing.