CEZ has approved a contract with Segfield Investment regarding an option to purchase a 36.33% stake in Severoceska energetika (SCE), a regional electricity distributor. CEZ currently owns a 56.92% stake in the company, hence would acquire over the 90% in SCE required for a squeeze out. For CEZ it is crucial to gain full control over the regional distributor in order to press ahead with its Vision 2008 restructuring program.
The Cabinet should debate the sale of the state’s 56% stake in Severoceske doly (SD) on Thursday, September 29. CEZ is reportedly offering CZK 9bn, which is less than the CZK10bn 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.