Bank of Cyprus rejects Marfin bid

The Board of Directors of Bank of Cyprus Pcl (BOCY) unanimously rejected the intention by Marfin Popular Bank to submit a takeover bid seeking minimum 35% control of the bank through a share exchange of 1.241 MPB shares with 1 BOCY share.

Based on the closing prices prevailing on Thursday, the last day before the stocks of all banks were suspended, the share offer values Bank of Cyprus at EUR 11.144 per share for a value of EUR 6.16 bln.

MPB had closed at EUR 8.90 and Bank of Cyprus at EUR 11.04 on the CSE on Thursday while in Greece, the closing levels were EUR 8.98 and EUR 11.14 respectively.
“We have unanimously decided to reject the deal,” said BOCY Chairman Eleftheros Ioannou during a press conference called in Nicosia, adding that the Bank’s CEO, Andreas Eliades who is in Athens will be holding a similar press conference in Athens to explain the reasons why the Bank of Cyprus decided to reject outright the bid.

The first reason is because according to Ioannou, the Marfin Popular Bank, which is the result of the merger of three financial institutions has not yet operated under a consolidated form. The international practise and experience has shown that mergers and acquisitions of such nature require time and cooperation at all levels.

“On top of this, MPB wants to acquire us (Bank of Cyprus) and Piraeus Bank, two banks that are even more bigger, a development that raises serious issues and risks for shareholders, the staff and clients of the Bank of Cyprus Group,” said Ioannou.

The second issue according to Ioannou is that the intention to submit a takeover bid is to finance it exclusively with shares. Ioannou said that until now, Marfin Popular Bank has not published audited consolidated accounts of the merged entity, which are required by another serious investor to study before deciding whether the offer is justified or not.

In any event, Ioannou added, Piraeus Bank has submitted its own bid for Marfin at half of the going rate. For Ioannou, the MPB offer does not reflect the size, credibility and excellent prospects of the Bank of Cyprus Group.

Ioannou considers the intention of Marfin as hostile and says the Board of Bank of Cyprus is fully justified to express its opinion.