Modified bids for the 66% stake in SE, the dominant Slovak power producer, were submitted by all three bidders, i.e. CEZ, Enel and Inter RAO, on Friday (source CTK). The privatization advisor should now recommend the tender winner to the privatization committee by 10 September. The privatization committee should make its recommendation to the Government for the final decision on the same day, i.e. 10th September. The transaction is expected to be completed by the end of the year. According to unconfirmed information, Inter RAO has increased its bid to approx. EUR 0.56 bn from EUR 0.47 bn while both CEZ and Enel have lowered their bids to EUR 0.66 bn from EUR 0.77 bn and EUR 1 bn respectively. We believe that CEZ has a realistic chance of winning the tender - the reduction of its bid probably reflects the elimination of some of the conditions raised by CEZ in the first bidding round. We still assess the bid as too aggressive given our estimated value of SE's equity of up to EUR 0.25 bn. As the market seems to be putting more weight on some general strategic implications of the possible acquisition, we do not expect a negative reaction by the stock price should CEZ win the tender - rather the opposite in fact.
Tomáš Gatěk