Piraeus to sell stake in Bank of Cyprus

Piraeus Bank has decided to sell its significant stake in the share capital of Bank of Cyprus Pcl after its merger proposal was flatly rejected by the Board of Bank of Cyprus.

Piraeus Chairman Michalis Salas told reporters following fresh speculation about a new bid that he will sell the stake since “Piraeus cannot meet the price of EUR 13-14 per share demanded by the Cypriots, which prices Bank of Cyprus at a higher value than Piraeus.”

Salas said that the Bank will decided on the best way as to how it will dispose its 8.15% stake in Bank of Cyprus, which if made at current prices will give a gain of EUR 170-180 mln for the Greek bank. In addition to booking a huge profit on its investment, it will also release desperately needed funds and capital needed to finance the ambitious plans of Piraeus, which is now interested to proceed with expansion plans in the Balkans, the Middle East and other areas.

The previous day, analysts at Ethniki had fully justified the decision of the Board of Bank of Cyprus to reject the merger offer made by Piraeus but had expressed the belief that a new bid would be forthcoming.

Piraeus had offered EUR 2 cash plus 0.36 of its shares for every 1 Bank of Cyprus share, valuing the BOC at EUR 10.63 per share as at December 19, 2006 prices (when the deal was made public), which the Board of Bank of Cyprus rejected outright claiming that it did not offer any premium and the cash component was low.

Bank of Cyprus shares initially dived on the news that Piraeus wants to sell its stake and exit. The share price fell to EUR 10.90, but then recovered to EUR 11 on the CSE before the close. On Tuesday, the shares had closed at a new record high of EUR 11.18, boosting the market cap of the Bank above EUR 6 bln level.