William Malcolm

PPF Raises O2 CR Stake To 90.01%, Plans Delisting

PPF Investment Group has acquired a 90.01 percent stake in O2 as part of an accelerated repurchase and is therefore preparing to initiate the withdrawal of these securities from the Prague Stock Exchange. Before the announcement of the accelerated repurchase on Wednesday, the group controlled 83.58 percent of the operator’s shares. She stated this in a press release today.

The increase in PPF Telco’s share in O2 CR’s share capital took place using the so-called accelerated repurchase method of 19,353,910 shares for a maximum price of CZK 264 per share. This was the first transaction of its kind on the domestic capital market.

Following the announcement of the share increase, it can be expected that in a relatively short period of several months a general meeting of the company will be convened, which will approve the start of the process of crowding out minority shareholders, Wood & Company broker Vladimír Vávra said. According to him, O2 shares should now be traded on the market at a slight discount to the price of CZK 264 per share. Today, O2 shares fell by 2.4 percent to CZK 262.50 around 10:30.

Only qualified investors could participate in the accelerated share repurchase. Those O2 shareholders who are not qualified investors will be able to sell their shares to the PPF Group as part of a subsequent mandatory redemption offer per the applicable rules.

“As a holder of more than 90 percent of O2 CR’s share capital, PPF announces its intention to initiate, per the legal norm, the forced transfer (so-called mandatory buyout) of all shares of this telecommunications operator’s shareholders to group companies,” PPF said in a report.

For several years, PPF has been developing its telecommunications activities in the markets of Central and South-Eastern Europe through infrastructure managers and operators. Related to this is the ongoing evaluation of the optimal form of ownership and financing of individual assets. According to spokesman Leoš Rousek, PPF’s decision to offer an accelerated repurchase of O2 CR shares reflects the fact that the volume of trades traded on these securities on the Prague Stock Exchange has been falling sharply for a long time. This year, the average daily volume of trades in O2 CR shares reaches 9.3 million crowns, which corresponds to the market liquidity of very small stock, not a company listed on the main market of the Prague Stock Exchange.

Transactions with O2 CR shares in volumes of at least tens of millions of crowns, which would correspond to the importance of this company, are now not feasible in the normal trading regime, the group said. For comparison, in 2011 the average daily volume of trades in O2 CR shares reached CZK 134 million. Five years later, it fell to 33 million crowns.

PPF thus enabled qualified investors to sell their shares in O2 CR at once through an accelerated repurchase. At the same time, the sellers will retain their right to the payment of the O2 CR dividend from the profit for 2020 and the amount corresponding to the reduction of the share premium. The right to the payment of this share of profits will also be maintained for small shareholders within the subsequent mandatory redemption.

Thanks to the acquisition of a share of more than 90% of the share capital and voting rights in O2 CR, PPF Telco can request the General Meeting of O2 CR shareholders to approve the mandatory redemption of the remaining O2 minority shares. The aim of the mandatory redemption is the forced transfer of all shares owned by other O2 CR shareholders to PPF Telco.

PPF Telco already owns 100 percent of the largest owner of the CETIN telecommunications infrastructure. O2 offers telecommunications and Internet services in fixed and mobile networks to 5.97 million mobile clients and 855,000 Internet users. Last year, the operator increased its consolidated net profit by 7.1 percent to 5.85 billion crowns. Revenues rose by 2.6 percent to 39.77 billion crowns.

PPF Group is active in 25 countries. It invests in several industries, from financial services to telecommunications, media, biotechnology, real estate to engineering. The group owns assets of 39.7 billion euros and employs 94,000 people worldwide.