Poland’s Alior Plunges on Bid for Raiffeisen’s Local Unit

(Bloomberg) -- Alior Bank SA plummeted the most in more than two months after saying it started talks to purchase Raiffeisen Bank International AG’s Polish unit amid concern that it would need new funding to pay for the acquisition.

The shares dropped 5.6 percent to 46.85 zloty, the steepest decline since July 6, at Thursday’s close in Warsaw. Alior, controlled by the country’s biggest insurer PZU SA, is seeking to buy Raiffeisen’s banking operations, while PKO Bank Polski SA is aiming at taking over its leasing business, the lenders said in separate statements late on Wednesday.

The acquisition would push Alior into raising fresh capital to secure funding of about 3 billion zloty ($787 million), “which may be seen negatively by its minority investors,” Marcin Gatarz, an analyst at Pekao Investment Banking SA in Warsaw, said by phone Thursday.

Alior, created in 2008, is the main expansion platform in the banking industry for PZU, which seeks to diversify its revenue in line with the government plans to boost local ownership in the nation’s banking industry. The potential purchase will follow a takeover of Bank BPH SA from General Electric Co. earlier this year and would bring the Alior, currently the eighth-largest bank by assets in Poland, closer to its strategic plan to become one of top six Polish lenders.

Book Value

Alior, which posted a profit of 309 million zloty last year, could sell new shares to buy a competitor, in a “similar” way it did to take over BPH, Chief Executive Officer Wojciech Sobieraj said in August. It could be ready with the next share offering in the second half of 2017. Alior and PKO want to buy Raiffeisen’s assets at about 3 billion to 4 billion zloty, Puls Biznesu newspaper reported on Sept. 9.

Alior, whose shares dropped 14 percent this year, is trading at 1.04 times its book value, compared with 1.2 times for the WIGBank index of the country’s biggest listed lenders.

To contact the reporter on this story: Marta Waldoch in Warsaw at mwaldoch@bloomberg.net. To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net, Piotr Bujnicki, Wojciech Moskwa