Erste Bank had finalized the acquisition of 100% of shares in Diners Club Adriatic in Croatia (DCA) for € 149.6m. According to
Erste Bank management comments, the acquisition will generate substantial synergies in the area of consumer finance and will support the
Erste Bank Group’s CEE-related commission income. Additionally, the GSM has appointed new supervisory board members, including Tomislav Vuic (currently deputy chairman of
Erste Bank Croatia) as president of the supervisory board and Peter Kisbenedek (designated CFO of
Erste Bank) as deputy president. The new management board of DCA has been also appointed, including the CEO Zeljko Menalo, previously deputy head of retail banking at
Erste Bank Croatia.
Our view: The final purchase price is below the highest end of the range (€ 153m) set conditionally at the time of initial agreement, given the company’s 2006 reported net profit of € 6.8m and equity of € 32m, the purchase price for DCA equals 2006A P/B of 4.7x and P/E of 22.0x, which is slightly higher than originally stated. In our opinion the news was broadly expected by the market, as the transaction was set to be completed in the 1Q07 and was a subject to regulatory approval in Croatia and Austria.
As of the end of 2006, DCA reported revenues of some € 44.2m and total assets of € 165.7m. DCA was founded in 1969 as the first credit card provider in Croatia. Currently it ranks second in the Croatian market, with a market share of 28%, after the combined market share in credit cards market would be 32%.