CEZ’s AGM yesterday approved CEZ’s purchase of the state’s stakes in regional electricity distributors and the sale of a stake in CEPS (the transmission grid operator, 100% owned by CEZ) to the state. While the stakes in the distributors are valued at CZK 32 bil., the stake in CEPS is yet to be valued. The completion of the transaction would be advantageous for CEZ, since (i) ownership of the distributors would significantly boost its domestic market power, and (ii) the CZK 32 bil. to be paid for the stakes is significantly below our valuation (minimum of CZK 40 bil). Nevertheless, the transaction must be approved by the Anti-Monopoly Office, which may see the low valuation of the distributors and/or the increased market power of CEZ as unacceptable. Most importantly, the transaction completion will come after a new Cabinet is formed (there is a general election this weekend in the Czech Republic), the new Cabinet may not be so keen to merge the dominant electricity producer with the regional distributors.
AGM also approved gross dividend of CZK 2.5 per share.
(Jiří Soustružník)