CEZ submitted bid for privatization of Severoceske doly and Sokolovska uhelna, total 14 investors

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Investiční bankovnictví KB

      The NPF announced that total 14 investors submitted their bids by Wednesday’s deadline for privatization of coal-mining companies. Eight companies are interested in privatization of Severoceske doly, while six companies submitted bids for privatization of Sokolovska uhelna. The steering committee should meet next week to select the investors, which will be allowed to conduct due diligence in the companies. The winning offer should be selected by the end of the year.

       CEZ confirmed that it submitted a bid for privatization of both companies, Severoceske doly and Sokolovska uhelna. By combining CEZ and the coal-mining companies, CEZ probably seeks to keep control over coal deliveries for its power stations (quantity and price). Severoceska doly covers 60% of annual coal consumption of CEZ and the rest is covered by Sokolovska uhelna and Mostecka uhelna. The negotiations on coal supplies are tough and they had to be investigated by the Antimonopoly Office in the past. The Czech government is against the takeover.

       Combination of CEZ and the coal-mining companies for reasonable price makes economic sense. Nevertheless, we consider the news neutral for CEZ without knowledge of further details (i.e. privatization conditions, government energy policy and purchase price).

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