OTP of Hungary has won the privatization tender for a 100% stake in Bulgaria's DSK Bank, the Bulgarian Bank Consolidation Agency announced yesterday.
While this is not favorable news for Erste Bank's strategic outlook and presence on eastern European markets (the acquisition would have boosted Erste's earnings growth potential after 2003), overpaying for the bank would clearly have been negative for Erste stock. Erste Bank bid EUR 293 mil. for DSK, which we evaluated at EUR 288 mil. (OTP bid EUR 311 mil.).
As we have not reflected the DSK acquisition scenario in our projections for Erste, we maintain our 12M target price of EUR 82 per share and our accumulate recommendation. Overall, we consider the news as largely neutral for the Erste stock.
Separately, Ceska sporitelna, Erste's 98%-owned Czech subsidiary, holds an AGM today; a CZK 20 (EUR 0.64) gross dividend per share for 2002 is expected to be approved.