A massive increase in interest from foreign companies, mostly Greek, to snap up undervalued Cyprus assets has led to a major boost in Mergers & Acquisitions (M&A) so far this year, with the total value of the deals seen at CYP 382 mln according to Financial Mirror records.
By far the single largest inward injection of capital comes from Piraeus Bank, which has built up a 8.15% stake in the share capital of Bank of Cyprus Pcl (BOC) valued at CYP 184.2 mln based on an average cost of acquisition of EUR 7.2 per BOC share, according to Financial Mirror estimates.
The second largest investment in a Cypriot title refers to the mega-deal earlier in the year when Marfin Financial Group purchased a 9.98% stake in Laiki Bank (CPB) from HSBC at CYP 1.7 per share in a deal valued at CYP 51.98 mln.
In February, the UK based Tosca Investment Fund purchased a further 8.18% stake in Laiki Bank from the HSBC stake, valued at CYP 42.6 mln while the remaining 3% of HSBC stake was sold to Laiki staff in a transaction worth about CYP 15.6 mln.
The total value of the HSBC stake sold to Marfin, Tosca and Laiki staff amounted to CYP 110.24 mln.
Best year
The total value of the M&A deals until July 2006 amounting to CYP 381.7 mln is more than the combined value of M&A deals made in 2005, 2004 and 2003, making 2006 the best year in local deal history.
It is worth noting that all the M&A deals monitored by the Financial Mirror were transacted in cash, without the involvement of equity, despite the fact that equity prices have been on the rise since last year.
The total value of M&A deals in 2005 amounted to CYP 134 mln, those in 2004 amounted to CYP 142.2 mln while M&A deals in 2003 amounted to CYP 81 mln.
Collapsed
The year 2006 would have gone in the history books as the M&A year of the century had the bid interest from Bank of Cyprus seeking control of Emporiki Bank of Greece proceeded.
BOC initially was seeking minimum 40% to maximum 100% control of Emporiki in a combined cash and equity offer, which at the time when the offer was made valued the deal close to EUR 3.8 bln. BOC was offering 6 euros cash and 3.25 of its shares for every EMP share.
Late July though, the Management of BOC decided to pull out of the race for EMP citing lack of information and clarity regarding Emporiki’s staff pension fund liabilities, which was also cited as a valid reason by the Central Bank of Cyprus for not granting such authorization to BOC to proceed.
Active year
Besides the banking sector, which may see more activity judging from strong interest by Aspis Group of Greece and a Cyprus based shipping group to wrest control of Universal Bank, there has been increased activity in other sectors.
The acquisition in July of 100% of Card Tech by the US-based TSYS valued at CYP 24.9 mln is considered as one of the largest M&A deals of the year.
The acquisition by the Government of Cyprus of the capital of Eurocypria Airlines for CYP 13.42 mln is also important and may trigger more activity on Cyprus Airways, if the government rescue plan collapses or is not approved by the EC.
Other deals involved Andreas Georgiou, the CEO of Universal Life teaming up with Photos Photiades Group to purchase 2.9 mln shares of UL from BOC valued at CYP 7.8 mln and the takeover of Christis Dairies by Delta Vivartia of Greece through the purchase of 45.8% controlling stake in CDL from NK Shacolas and CTC for CYP 7.5 mln. The Delta bid is still in progress since it requires permission from the Competition Commission since Delta also holds majority control of Charalambides, the island’s second largest dairy products manufacturer.
In the hotel industry, two major deals worth noting refer to the A. Tsokkos Hotels subsidiary purchase of the Vrissiana Hotel from Aqua Sol Hotels amounting to CYP 7 mln and the sale by Lordos Hotels subsidiary of the Andromed Bay Hotel for CYP 6.05 mln.
The purchase by CAC Papantoniou of a supermarket in Paphos and the acquisition of a 50% plus one share stake in MFS Holdings by Aspis Proina of Greece, each valued at CYP 4.5 mln top the largest deals of 2006 until end of July.
