Marfin drops out of Emporiki race
Alpha Bank to decide by July 25
Deutsche Bank has described the Bank of Cyprus takeover bid for control of Emporiki as more attractive compared to the bid submitted by Credit Agricole.
Deutsche Bank is maintaining the price target of CYP 5.60 or EUR 9.80 on the BOC shares with a “buy” recommendation, which comes as another confirmation of foreign analyst support for the BOC bid following a similar position by UBS last week, which maintained its price target of CYP 7.20 and “Buy1” recommendation.
DB, however, says that in the event of a successful bid, the earnings per share of BOC will come under pressure in the medium-term.
“If there is a counter-bid, we don’t see how BOC will be able to improve its existing offer,” DB says in its report, viewing possible counterbids emerging from Alpha Bank and Eurobank.
DB is worried about the impact of the bid on BOC’s Tier 1 capital, which will tumble from 9.6% to 6.4%, according to its estimates. Even if the forecasted EUR 40 mln in profits from Emporiki are included in the calculation, DB says the Tier 1 capital will improve to 6.6% from 8.7% prior to the deal. BOC is counting on EUR 300 mln in tax breaks, which would lift the Tier 1 capital to 7.4%.
DB maintains that BOC will be vulnerable in the event of the deal succeeding, as its Tier 1 capital will fall below 8.2%, where it was in September 2005, before the recent capital increase through the rights issue.
Marfin abandons Emporiki bid
Marfin Financial Group will not bid for control of Emporiki Bank, according to its Vice Chairman Andreas Vgenopoulos, who during a conference call with analysts Tuesday described the Credit Agricole bid as not meeting the tremendous improvements achieved by the management of Emporiki in recent years.
“We studied the BOC bid carefully, which based on the book value of the share gives it a 30-euro per Emporiki share price, while there exists the possibility of a counter-bid, which is why we (Marfin) decided to stay out of the process to wrest control of Emporiki,” Vgenopoulos said.
Marfin however is interested to buy excess branches of Emporiki as well as staff that may become available from Bank of Cyprus or any other bank that eventually secures control of Emporiki, he said.
Referring to the Marfin stake in Piraeus Bank, Vgenopoulos described the investment, at just under 2% of the capital of Piraeus purchased at EUR 18.42 per share, as “very friendly” and for investment purposes, which would boost Marfin’s investment income.
“We have no intention to increase our stake in Piraeus above 2%,” said Vgenopoulos, adding that he does not believe in hostile bids. But he would not rule out another takeover in the near future of a small bank.
Balanced
The Greek government will study the takeover bids submitted by BOC and Credit Agricole objectively and in a balanced way, Greek Finance Minister Alogoskoufis told his visiting Cypriot counterpart Michalis Sarris.
The board of Emporiki is supposed to meet between 10 to 13 July in order to respond to the two pending takeover bids, but may hold out for a third bid by the deadline of July 25.
Alpha Bank
Even though Alpha Bank denied any intention to submit a bid for control of Emporiki, Greek press reports suggest that a bid is likely from the bank by July 25 in a combined cash and equity deal.
Greek press sources suggest that Alpha Bank may bid a total of EUR 4.1 bln for Emporiki offering 12 euros in cash and one of its shares for every Emporiki share.
