The Cabinet should debate the sale of the state’s 56% stake in Severoceske doly (SD) today. CEZ is reportedly offering CZK 9bn, which is less than the CZK 10bn we and the market expected. Should the information prove correct and the state accepts CEZ’s bid, we would regard the acquisition as positive. In addition, our valuation does not assume any breaking of current mining limits, which would increase the value of the state’s stake in SD beyond CZK 10bn.
The Ministry of Industry and Trade spokesman has confirmed that financial group Penta has offered CZK 11bn for the state’s stake in SD. Nevertheless, given CEZ’s exclusivity, the Cabinet will today only debate CEZ’s bid. The sale of SD to CEZ at a price below other bids may potentially mean a state subsidy and the state may be forced to ask CEZ to increase its offer. Source: PBW