bne IntelliNews – Moneta Money Bank shareholders do not support PPF buyout

Shareholders of Czech lender Moneta Money Bank did not support proposed Czech crowns 25.9 billion (€ 1 billion) merger deal with Czech investment group PPF’s online bank, Air Bank .

At an extraordinary general meeting on June 22, a majority of shareholders supported the merger but less than 75% supported the issuance of shares to finance it. The vote marks the second defeat of PPF’s drive to create a Czech banking group by merging with Moneta and will now force it to change the structure of the deal or soften its offer, or put its plans on hold for the time being.

The merger, backed by the management of Moneta, would have created the third largest bank in terms of customers and the largest Czech-controlled lender. Moneta ranks sixth in terms of assets and Air Bank eighth.

Moneta’s equity-based acquisition of the Czech and Slovak financial assets of PPF would have led to the de facto reverse takeover of Moneta by PPF, due to PPF’s existing 30% stake in Moneta following an offer actions in the spring. After issuing new shares to PPF for its assets, the private financial group reportedly controlled around 55.4% of Moneta.

At the EGM, 61.9% of shareholders voted in favor of the merger (when only a 50% majority was required) but only 61.7% voted for the issuance of new shares to PPF for its active when a majority of 75% was required.

Moneta issued a press release after the EGM saying: “The acquisition of 100% of the shares of Air Bank as, Home Credit as and Home Credit Slovakia as by Moneta Money Bank as it cannot be completed on the basis of the share purchase agreements approved under item 3 of the agenda of today’s general meeting.

But both Moneta and PPF have indicated that they are still hoping to find a way to make the deal work.

Moneta CEO and Chairman Tomas Spurny commented: “Most shareholders expressed agreement with the vision of creating a strong Czech champion for independent traders and small clients. We believe that we will find a way to get the necessary support and to finalize the transaction.

PPF said the vote showed the “consent of Moneta shareholders to the acquisition of assets in the Air Bank group, confirms the agreed valuation of those assets and also confirms that most of Moneta’s existing shareholders support the plan. merger of Moneta with Air Bank and the Czech Republic. and Slovak mortgage ”.

Hedge fund Petrus Advisers, which claims to own 5% of Moneta, had criticized the proposed transaction for, among other things, the overvaluation of Air Bank and other assets relative to Moneta. Air Bank was valued at 2.5 times the book value, while Moneta was only valued at 1.5 times the book value. PPF argues that the relative valuations stem from the superior profitability and growth potential of Internet banking.

Proxy advisers Glass Lewis and Institutional Shareholder Services had also questioned the details of the transaction and recommended that shareholders vote against it.

Under the proposed deal, PPF would sell Air Bank for CZK 21.32 billion, consumer lender Home Credit Slovakia for CZK 751.1 million and Czech consumer lender Home Credit for CZK 3.83 billion. CZK. PPF would be paid primarily in newly issued shares and then launch a mandatory bid for the remaining shares, although it has said it wants to keep significant float.

PPF, whose founder Petr Kellner died in a helicopter crash in March, is not expected to abandon Kellner’s long-term ambition to build a Czech banking empire and is expected to continue suing Moneta.

In an article in the Czech daily Hospodarske noviny on June 21, PPF CFO Katerina Jiraskova wrote: “PPF is used to overcoming obstacles. We know very well that “there is never only one path to a goal”, and we can flexibly choose scenarios to achieve our goals. This is undoubtedly true in this case as well. “

Jiraskova stressed that the Czech Republic lacks a strong domestic lender. Radical right-wing governments in neighboring Poland and Hungary have launched campaigns to create national (mostly state) lenders after most of their banking assets were privatized to foreign banking groups after the collapse of communism.

“The vision has always been to make Air Bank a banking house based on national capital so that, like the national banking leaders of other European countries of similar size, it can support the national economy and its growth”, she wrote. “We want to build a new major player with a financial base in the domestic banking market, whose roots are in the Czech Republic, but which can also conquer other markets.

The PPF claims that 70% of the Czech banking sector’s net profits are distributed among the top five (foreign-owned) banks. Jiraskova argued that Moneta and Air Bank must team up to meet this challenge.

“Due to increasing regulatory requirements, it will be increasingly difficult for small and medium-sized banks to offer the best services and products, especially in competition with the rapidly growing international fintech platforms,” ​​said she wrote.

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