The government expects CZK 50 bil.-60 bil. from the sale of its 60% stake in KB (CZK 2,185-2,620 per share), according to the Czech weekly Euro. The privatization steering committee reportedly wants the four short-listed candidates to bid in three rounds in order to maximize the price. While the state is generally expected to fetch a good selling price, CZK 50-60 bil. is unrealistic and is likely to be treated skeptically by the market. We analyzed the range of possible selling prices and their implication for minority interest value in our latest KB report, released March 7. Our recommendation is to hold the stock, given the limited discount to our new target price of CZK 1,095.
(Ondřej Daťka)