As expected, CEZ’s CEO, Martin Roman, said that CEZ is interested in share buy-back up to 10% of its capital following the state’s decision to sell c7% of its stake in the company over the stock market. Note that the state owns 68% stake in CEZ. Any share-buy back must be approved by CEZ’s General meeting hence the state.
Our view: Given our valuation at CZK1,075/share, a share buy-back at levels below it would be favorable to remaining investors. At the same time, a risk of share over-hang would be substantially reduced. Based on Czech Commercial Code, a company can hold its shares up to 18 month before they must be can either cancelled or transferred to another entity.