According to the Bulgarian privatization agency, Bulgaria has two options in the tender for the Varna Power plant after the first bidder, Russian UES, refused the contract. In accordance with Bulgarian law, the government could start negotiating with the second bidder in the tender, CEZ. Next option is to issue a new tender. The privatization committee should make a decision by next week. Note that CEZ finished second in the tender, offering EUR 287m, implying an EV/EBITDA of 22x compared with UES’s EUR 580m, an implied EV/EBITDA of 44x. We would view the acquisition as positive for CEZ, as the company has already acquired three distribution companies in the region and is currently involved in other tenders. We believe that utility assets in South and Eastern Europe (SEE) offer both restructuring potential and growth opportunities, given the expected strong growth of GDP in the SEE region. The news should have a positive impact on CEZ’s shares today and we reiterate our Buy recommendation.