According to Czech daily HN, financial group PPF, which controls Ceska Pojistovna, is considering the sale of a 10% stake in Modra Pyramida (MP).
Our view: KB has recently announced an acquisition of 50% of the building society (from BHW) which brought KB's total shareholding to 90% of the company, but KB has also made an offer to acquire the remaining 10% from CP. According to the KB's management, the bank would pay an equal price for the remaining stake, which is EUR 24m and implies a historical P/B of 3.7x. We have already revised our forecasts for a € 120m acquisition of a 50% stake in MP, assuming full consolidation from the beginning 2007. Although the acquisition of MP is viewed as slightly EPS accretive (+0.8% for 2007 and +1.4% for 2008 on our estimates), we believe the price fully values the company. The deal presents not only potential for cost savings but also cross-selling opportunities, as banking products may be sold to MP's 1m customers. We do not expect any price reaction to that news today. We reiterate our Buy rating on the stock with a fair value of CZK 4,281 per share