CEZ ended talks with VSE Energy on acquisition of 8 distribution companies in Ukraine

Our view: Ending of the talks was somewhat expected, as CEZ said that they would end the talks by the end of this year if no agreement on price is reached. Note that VSE Energy demanded some USD700-900m while the expected price CEZ would pay is around cUSD490-540m.

While in general investment in Ukraine would be positive from the expected growth in demand for electricity point of view, the price asked was rather too high to generate positive NPV to CEZ, which demonstrates that CEZ is not prepared to overpay any acquisition. At the same, there is number of other tenders/JV in particular South Eastern Europe, where CEZ is building its strong hold.