Agrofert announced yesterday that it is seeking new terms from the National Property Fund toward acquiring a 63% stake of Unipetrol. Agrofert was announced as the Unipetrol tender winner last December. The company cited a conflict with IOC members (IOC holds 49% in Ceska rafinerska, 51% is owned by Unipetrol) and floods as the main reasons for its step. We believe that the government will cancel the current tender sale.
The market reacted positively since investors did not favor Agrofert as the Unipetrol tender winner due to transparency concerns and fears of minority shareholder abuse. Nevertheless, we keep our hold recommendation on Unipetrol stock since:
(i) it is far from granted that more transparent and minority friendly bidders would take part in a new tender;
(ii) Unipetrol’s main subsidiaries posted not really encouraging H1 2002 results, and flood damages and related production suspensions are expected to cost the company billions of Czech koruna.
Jiri Soustruznik