Eurotel minority shareholders AT&T and Verizon Communications have reportedly given preliminary agreement to the sale of their 49% stake to Cesky Telecom, the 51% Eurotel owner. Cesky Telecom continues to seek to reduce the previously agreed to price of USD 1.285 bil., Reuters reported.
A Cesky Telecom AGM, set for June 13 (the record date is June 11), is to discuss the acquisition of the 49% stake in Eurotel and its financing, dividend policy, and the distribution of 2002 profits and part of the retained earnings.
Cesky Telecom’s acquisition of Eurotel is clearly looking more likely, and negotiations could plausibly be completed before the June AGM. While the acquisition is strategically advantageous, we believe USD 1.285 bil. is too much for the stake. Our current valuation denominated in USD (note that the Czech currency has appreciated by 10% vs. the US dollar YTD) suggests a maximum price of USD 1.120 bil (a difference of CZK 14 per share; our target price is CZK 393 per share).