According to Reuters, citing unnamed sources, the assets of Bank BPH-200 are likely to fetch between EUR 1bn and EUR 1.5bn. According to the article, the second round of the acquisition process should be completed by mid to late February, with final bids to be submitted. Raiffeisen International is apparently among the second round bidders but other international banks, previously speculated to have been interested, were absent (Credit Agricole, Getin Bank, HSBC, Millennium bcp, and KBC). UniCredito has declined to comment.
Our view: The news story, which was posted yesterday during the session, had little impact on trading. The wide price range cited in the story, implying a historic P/B of 2.6x – 4.0x for Bank BPH 200, is broadly in line with our expectations, based on recent M&A transactions in the banking sector in Poland as well as throughout the region, for a 2006F P/B of 3.1x – 4.0x. Given the competitive bidding process, including a rumoured 6 bidders in the second round, we believe the final price is unlikely to come in at the lower end of the range. We factor a valuation multiple for Bank BPH 200 of 2006F P/B 3.6x into our valuation of Bank BPH, arriving at a fair value estimate of 942.1 per share, which is in line with the current stock price. We maintain our Hold rating.