The Czech Cabinet last night decided to continue negotiations with two of the three final bidders in the CT tender sale, namely TDC/Deutsche Bank/Blackstone Group and Swisscom/CVC Capital Partners/Spectrum Equity Partners consortia. The deadline for their new bids is April 26, and Cabinet should discuss these on April 29. The finance minister indicated that the bids discussed today implied a 10% premium on market values, implying bidders' valuation of the government's 51% CT stake at some CZK 60 bil. (approximately CZK 365 per share), well below the prime minister's CZK 80 bil. (CZK 485 per share) expressed target.
Further to that, and quite remarkably, the finance minister said that the expressed requirement for CZK 80 bil. for the state's 51% stake does not represent the government position regarding price (implying it is the prime minister's own opinion). This seems to suggest some room for compromise and a slightly higher chance of a deal before the June general election. Indeed, the MFDnes newspaper quotes "a source close to privatization" as suggesting that the increase (demanded by the government over the current bids) is less than CZK 10 bil., and that the bids are close (to an acceptable level). Also, according to the paper, a representative of JP Morgan, the government's advisor in the CT sale, suggests that price will not be the only criterion in the next round. The theoretical prospects of higher bidding and the suggestion of flexibility on the government's part might be slightly positive for the stock today, though we do not expect any significant response.
(Ondrej Datka)