According to Polish daily Parkiet, Prokom is likely to execute an option to increase its stake in Comp up to 40%, from its current 20%, purchasing shares from Comp’s CEO, Jacek Papaj. Exceeding the 40% hurdle would allow Prokom to gain a majority on the supervisory board and consolidate Comp via the full-method versus the equity-method used now. At the same time, the exceeding a 33% ownership threshold would require Prokom, according to the newly introduced securities law, to announce a public tender for a stake of up to 66%. According to our estimates, the total cost for Prokom could exceed PLN 100m. Since Prokom bought 20% of Comp in December 2004, Comp's share price has risen more than 130%.
The option agreement, however, allows for another non-cash settlement that we believe would be preferred by Prokom. Prokom could merge Comp with its subsidiary – Safe Computing – also dealing with security systems. The transaction could require Comp to raise its equity in exchange for Safe Computing’s assets. Parkiet also speculates that, in order for the contract to be approved by Comp’s EGM, Prokom could also input a potential PKO BP contract to Safe Computing.
In our opinion, should the merger of Comp with Safe Computing take place, it would be favourable for Prokom, as the security competencies would be put in one entity. This would also be a relatively cheaper method (in terms of cash outflow) of gaining control over Comp. At the same time, we believe the news could be rather negative for Comp’s shareholders, as we suspect that the company’s CEO and, at the same time, the biggest shareholder may be attempting to get the best price for its shares.