As expected, CEZ exercised its option to buy a 39% stake in Severoceska energetika (SCE), a distribution company in the Northern Bohemia from Segfield Investments. CEZ’s stake would increase from the current 57% to 96% allowing it to squeeze out the remaining minorities, which include Teplica municipality and others. Taking full control of SCE is for CEZ important due to its ongoing Vision 2008 restructuring program, which integrates regional distribution companies while creating new companies organized according to their activities rather then geographical location. CEZ expects the deal to be settled in a few days and no price has been announced. We expect the price to reach around CZK4.1bn. As CEZ was expected to take full control over SCE, we do not expect the news to have any significant impact on today’s trading. We reiterate our Hold recommendation.