has signed an initial agreement (subject to the Ukrainian authorities approval) to buyout the EB
RD’s 28.25% stake in its Ukrainian subsidiary Kredobank. Following closing of the transaction PKO BP
will increase its stake from 69.93% to 98.18%. The price was set as a higher of following: 1) EB
RD’s initial investment + interest based on the interbank rate (from April 2004 to sale date), and 2) 1.7x equity denominated in €.
Our view: In front of the planned expansion of its Ukrainian operations, we believe that the move to buy out the EB
RD now is a good strategic move. Though much higher multiples have been paid in M&A transactions in the country, this mainly reflects a control premium. Given the bank’s small size and that it is a minority stake, we believe that the price of 1.7x equity is reasonable. Although we view the deal positively, we do not expect the news to have a significant trading impact today.