Warsaw loses out. Again.
The transaction still has to be approved by regulatory bodies. According to daily Hospodářské noviny, the VSE is willing to pay around €192 (CZK4,769, zł.737) million for a 100 percent stake in the PSE. Other interested parties included the Warsaw Stock Exchange (WSE), NASDAQ OMX and, according to some press reports, Deutsche Börse and NYSE Euronext.
"The Prague bourse will become an important partner and will strengthen our existing stock-exchange alliance of Budapest-Ljubljana-Vienna," said Michael Bühl, co-CEO of the VSE. Jan Klenor, CEO of investment bank Patria Finance - whose 24.48 percent stake makes it the largest shareholder in the PSE at present - told the Czech News Agency (ČTK) that he hoped the partnership with Vienna would reinforce the continuing development of the Czech capital market.
Yet, there are skeptical voices as well. Jan Procházka of brokerage Cyrrus, which is also a shareholder in the PSE, pointed to the new owner's weaknesses. "I am concerned about future development on the IPO scene, which has recently performed poorly both in Prague and Vienna," he said.
Cyrrus' favorites were the WSE and Deutsche Börse, as the brokerage has criticized Vienna's influence on its subsidiary in Budapest. Procházka acknowledged that the Vienna bourse had a few positive qualities as well, such as its skills and experience in trading investment certificates. He also categorically rejected the idea that activity on the Prague floor would be reduced or shifted partly to Vienna.
Pavel Makovec of the Arca Capital Bohemia financial group told ČTK that the VSE was only delaying its own takeover by a global player. "This is why the Prague Stock Exchange cannot be expected to turn into an alternative source of financing for Czech companies. If there was interest in developing the Prague bourse, the Prague bourse would buy the Vienna or the Warsaw bourse and not vice-versa," Makovec said.
The biggest loser
The VSE is the largest regional bourse in terms of turnover and the majority owner of two stock exchanges in the CEE region. Together with Österreichische Kontrollbank it jointly owns 68.8 percent of the Budapest Stock Exchange and, in June of this year, it acquired an 81 percent stake in the Ljubljana Stock Exchange. In addition, the VSE cooperates closely - without any cross holdings - with many other stock exchanges in the region, including those in Bucharest, Sarajevo and Banja Luka.
The biggest loser in the deal seems to be the WSE, the leading equity platform in CEE in terms of market capitalization and number of IPOs. The WSE has been openly competing with the VSE for regional leadership. Not surprisingly, the WSE and the VSE bid most aggressively in the tender for the PSE. The Warsaw bourse, which Patria initially disliked because of its state ownership, was excluded from late negotiations in the formal tendering process but nevertheless submitted a bid worth €150 (CZK3,725, zł.576,) million. According to press speculation, this was the highest initial offer. Ludwik Sobolewski, head of the WSE, declined to comment on why its bid was unsuccessful. "PSE shareholders chose quick cash instead of the opportunity for development of the Czech capital market," he said. Sobolewski claimed that leadership could not be achieved simply by swallowing other bourses, but required an effective integration strategy to achieve synergy effects. On the contrary, he said, a buying spree could be very harmful for the group.
Anna Sieczkoś
This is an edited version of an article originally published in Czech Business Weekly
