Constitutional Court - minority shareholders have to be offered buyout of their shares in privatizat

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Investiční bankovnictví KB

      Contitutional Court decided that the minority shareholders have to be offered a buyout of their shares even in case of privatization. In our opinion, this represents positive news for minority shareholders and negative for government budget. The Constitutional Court decision raises acquisition costs for the investors and they will be offering lower prices for the government’s stakes. On the contrary, minority shareholders will directly participate on any privatization premium.

      

       The news is directly related to Unipetrol, Cesky Telecom and CEZ. Unipetrol should be the most sensitive to this news due to following reasons. Privatization of Unipetrol is on track and investors could cash privatization premium in relatively well predictable horizon (12-18 months). Moreover, shares of Unipetrol are undervalued, which also supports our expectations of payment of relatively high privatization premium.

      

       In case of Cesky Telecom and CEZ, the news should also support their share prices, but in lesser extend compared to Unipetrol. Price offered for government’s stakes in these companies is difficult to estimate – the major uncertainty is future structure of both companies. Cesky Telecom could possibly take over Eurotel and it is not clear how many distributors will CEZ purchase. Moreover, investment horizon is much longer compared to Unipetrol (2-3 years).

      

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