Head of CEZ M&A Vladimir Schmalz commented for Reuters acquisition activities in Ukraine and Bosnia. VS Energy which owns six Ukrainian distribution companies is willing to speed up negotiations concerning majority stakes in these companies and sign agreement by the end of this year. Ukrainian distribution companies serve about 2m customers and the estimated price should be in range of USD 490-540m. Satisfactory progress can be seen also in connection to project in Bosnia, where CEZ would like to participate together with state company Elektroprivreda on local power plant completion and purchase of coal mines. According to Reuters, this investment should over time reach up to EUR 1.5bn.
Separately, CEZ agreed on acquisition of five heat distributors in northern Bohemian towns with Czech Energy Holding. Heat is supplied by three CEZ’s plants in the region. Final contract condition will be negotiated in coming weeks and transaction should be finished by the end of the year. We view possible acquisition positively, however until next details are release we do not expect any impact on stock price. We reiterate out Buy recommendation on CEZ.