No break yet in BRE, Handlowy merger
BRE Bank President Wojciech Kostrzewa last week said that it was unlikely any resolution to the shareholder dispute over the proposed merger of his bank and Bank Handlowy would be found in the near future.
Despite shareholders approving the merger at the beginning of December, the two banks have been unable to join due to a lawsuit filed by key shareholders the Treasury Ministry and insurer Powszechny Zaklad Ubezpieczen (PZU), which combined own more than 30% of Handlowy. The stake includes convertible bonds that PZU holds worth 24%.
The two parties claim that the merger is unbeneficial for shareholders as the proposed share-swap ratio of 2.4 to one prices Handlowy shares too low.
"I hope the outcome (of the dispute) will be positive," Kostrzewa told the Business Journal last week. "It might be expected in the next few weeks."
Kostrzewa said he believed there was a 90% probability that both sides would reach an agreement and the merger will be completed according to schedule, by the end of June. He rebuffed rumors circulating last week that several foreign banks, such as Germany's HypoVereinsbank and the U.S.'s Citibank, were interested in taking a stake in Handlowy.
"It's all speculation (about) what's going to happen if the merger doesn't come through," Kostrzewa said.
Analysts are still betting that the merger will go through. They said that PZU is more interested in getting a good price for its Handlowy shares and will be willing to negotiate.
"We should keep in mind that PZU is not as interested in the merger as in selling Handlowy's shares," said Adam Kalkusinski, a salesman with Wood & Co. "It will agree on the merger under one condition: If Commerzbank and other shareholders will oblige to buy them out."
PZU holds 6% of Handlowy in direct shares, but controls 24% once convertible bonds issued by the Treasury Ministry are figured in.
PZU and the treasury have said that they would be satisfied with a ratio of one BRE share for 1.7 Handlowy shares, but BRE and Handlowy have both objected to that proposal.
"I don't think the share-swap ratio will be changed," said Pawel Szymanski, an analyst with Schroders. "This is a closed matter. If any agreement is reached (between the shareholders and the ministry) it will be the subject of a separate agreement."
