The current Prime Minister, Mirek Topolanek said that the state’s c7% stake in CEZ worth cCZK31bn ~ EUR1.1bn could be sold also to a strategic investor while the Minister of Finance, Vlastimil Tlusty favours a market sale. The current Government plans to sell the stake in the 1H07 nevertheless, the opposition CSSD is against the privatization. Note that CEZ itself expressed an interest in buying those shares.
Our view: Despite we see the likelihood of the current ODS minority Government receiving confidence small, in theory the Government may stay in power long enough to go through the sale of its 7% stake in CEZ. Nevertheless, given CEZ’s interest in share buy-back, which would allow the company to buy up to 10% of its capital (must be approved by GM), the risk of potential share over-hang is diminishing.