First Chemical Holding company (Permira Funds) announced it has obtained 54.8m of BorsodChem shares on a public offering closed last Friday. First Chemical Holding in partnership with VCP controls 66.6m (58.8m+7.8m) of total BorsodChem shares representing a 87.5% stake. (Beyond this, VCP owns 9.9m BorsodChem shares, and plans to remain a 13% investor in BorsodChem). According to business daily Napi Gazdasag squeeze out could start in February 2007, as the partners’ ownership threshold will exceed the 90% limit to initiate squeeze-out only after the registration of cancellation the half of the employee shares (which was approved on the EGM on 13th October 2006).
Our view: We see the news as neutral, as given the bid premium offered it was widely expected that First Chemical Holding will probably reach the 90% threshold to be able to initiate squeeze out and delist the company according to their earlier announced plans.