Czech Billionaire Family Faces Final Showdown Over Bank Merger

(Bloomberg) -- The heirs of Czech billionaire Petr Kellner are close to clinching one of his last large deals nine months after he died in a helicopter crash.

Shareholders in Prague-traded Moneta Money Bank AS are set to decide on Monday whether to approve the purchase of a smaller rival from the Kellner family’s PPF Group NV. Under the complex proposal, Moneta would pay 25.9 billion koruna ($1.2 billion) for PPF’s Air Bank Group and create one of the largest lenders in the country.

To increase chances of sealing deal, PPF has built a nearly 30% stake in Moneta, and has said that its third offer is the last attempt to merge the two banks. If the transaction is approved, the acquisition would be mostly financed through issue of new Moneta shares, and the outcome of the capital increase would determine whether PPF gains control over the combined entity. 

After the previous proposal failed to get sufficient support from other Moneta shareholders in June, PPF put forward amended terms last month, winning endorsement from two investor advisers that had previously opposed the merger.

“The new offer will definitely appeal to many investors, and the chances of approval are significantly higher than last time,” said Bohumil Trampota, a stock analyst at Komercni Banka AS.

Both PPF and Moneta’s management have promoted the transaction as a way to create a bigger and more profitable local bank that could better compete in a market dominated by the units of KBC Groep NV, Erste Group Bank AG and Societe Generale SA. The investment company needs two-thirds of all shareholders present at the meeting to back the complex transaction.

The proposal envisages creating the fifth-biggest Czech bank with about 510 billion koruna in assets. The new entity would have almost 2.5 million customers, the third-biggest client base in the nation of 10.7 million, and would become the country’s biggest provider of consumer loans.

Unlike most PPF deals, this case is unfolding in public and includes clashes with activist shareholder Petrus Advisers Ltd., which says it owns about 10% of Moneta. The London-based fund is the main critic of the plan, saying the terms are unfair and that the Czech bank would be better off as a standalone company.

Read More:

• Billionaire Family Sweetens $1.2 Billion Czech Bank Merger
• Billionaire Kellner Heirs See Better Odds of Czech Bank Deal

While keeping Air Bank’s earlier price tag, the amended offer allows other Moneta investors buy new shares in the capital increase. Komercni Banka’s Trampota expects PPF will eventually control the merged entity, although this depends on the number of other shareholders participating in the capital increase and other factors.

Moneta shares have outperformed since the improved proposal because it sets a de-facto floor of 90 koruna per share for a potential mandatory buyout offer if PPF does gain control. Still, the current market price trails the 102.55 koruna average 12-month price target, for standalone Moneta, among analysts covering the stock.

PPF, which has about 40 billion euros ($45 billion) in assets including financial services, telecommunications and media, has said it doesn’t plan to delist the combined entity nor squeeze out minority owners because it sees value in keeping this type of business publicly traded. While approval is more likely this time, the firm will accept any outcome of the extraordinary general meeting and of the proposed capital increase, its Chief Financial Officer Katerina Jiraskova said in an interview earlier this month.

“It was our decision to leave the options open because the combination makes sense to us,” she said. “We think this has a better chance to be approved, because we’ve addressed the concerns of other shareholders.”

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