According to the Czech Press Agency, the Cabinet will ask a consortia of TDC/Deutsche Bank/Blackstone Group and CVC Capital Partners/Spectrum Equity Partners/Swisscom to raise their second-round bids for Cesky Telecom by at least 10% by July 19. The previous Cabinet did not accept the bids submitted in April, when the TDC/Deutsche Bank/Blackstone Group consortium reportedly bid CZK 55 bil., or CZK 335 per share, while the bid of the CVC Capital Partners/Spectrum Equity Partners/Swisscom consortium has not been reported. We expect the new Cabinet, which will again be dominated by the Social Democrats (a coalition government should be formed in the next few weeks), to pursue a Cesky Telecom sale, even if the bidding is not raised, the Cabinet could attempt direct negotiations with the bidders. The news could help the stock.
(Jan Hajek)