Bivideon (a 72% stakeholder in Cra) announced on Friday evening that it had withdrawn its SEC application for a voluntary buy-out offer to Cra minority shareholders. Bivideon said that it would clarify some technical aspects of the offer and that it would seek an additional appraisal, as required by the SEC. Bivideon also said that should it present a new buyout offer, the price would not exceed the originally announced CZK 245 per share.
While some investors may be otherwise encouraged by the increasing prospect of SEC possible request for a higher buy-out price it appears that Bivideon would withdraw the tender in such event; therefore, there is no sound reason for the stock price to rise significantly above the CZK 245 level (where, on the other hand, it should find considerable support in the coming weeks/months), we believe. If Bivideon were to outright cancel the tender, the stock would be thrust back into a original situation of possible minority-shareholder abuse, low liquidity, and transparency concerns, which still weigh heavily on the otherwise undervalued stock.
We reiterate our hold recommendation.
Separately, a CRa EGM is scheduled for tomorrow, July 22. It was called at the request of a minority shareholder, Netla Management Limited, and it will address (i) the valuation of CRa's 39% stake in T-Mobile CR (the No. 2 domestic mobile operator, and CRa's main asset), (ii) the loss of CRa's 40% holding in Contactel (an alternative telco operator; we assign zero value to the stake), and (iii) the buyout offer from Bivideon.
Jan Hájek