Tycoon’s Team Rebuffs Activists Over Czech Bank Merger Plan

(Bloomberg) -- Czech billionaire Petr Kellner's investment company defended the terms for its proposal to take over Moneta Money Bank AS, rejecting criticism from activist shareholders that the plan was disadvantageous for the Prague-traded lender.

PPF Group NV is “strongly committed” to combining Moneta with its Czech financial assets, said Jean-Pascal Duvieusart, a PPF shareholder and chief executive officer at its Home Credit BV unit. In a phone interview on Monday, he dismissed complaints by two Moneta investors alleging that his group is overstating the value of its Air Bank and affiliated businesses.

PPF, whose acquisitions rarely unfold in public before a deal is agreed, is approaching the sixth-biggest Czech bank two years after failed talks on a proposal with a different structure. According to Duvieusart, the fresh proposal is “significantly less risky” for Moneta shareholders, while Air Bank has since become a more valuable company with improving profitability and a growing client base.

“I think the offer we put up for discussion with Moneta management is very strong and fair,” he said. “Air Bank is now a demonstrated success story.”

To boost the chances of the merger via a share exchange, PPF last month proposed to first buy up to 29% of Moneta in a voluntary tender offer at 80 koruna per share. The stock initially jumped 10%, but has since stabilized below 75 koruna, in a sign that some shareholders may reject the offer.

It rose 0.5% on Tuesday as of 10:18 a.m. in Prague to 74.7 koruna, valuing the bank at 38.2 billion koruna ($1.8 billion).

Read more: Moneta Wants Talks on Terms of Billionaire's Bank Merger Plan

Shareholders Franklin Templeton Investments and Petrus Advisers have opposed the transactions, saying their timing during the pandemic is inappropriate and questioning the strategic fit, according to a Moneta statement. Petrus, which holds less than 3% in the bank, considers the fair value of the stock at 95 koruna and says the richest Czech wants to become majority owner without paying an adequate control premium.

“They are two shareholders with an activist role, so they are in the business of trying to get more for their investments,” said Duvieusart. “We are engaging in a dialog. We've made an offer and we'll subject it to due diligence.”

Moneta and Air Bank together held assets totaling 454 billion koruna in the third quarter of last year, which would make their combined balance sheet the fifth largest among Czech lenders. Duvieusart said PPF wants to create one of the country's three largest banks for retail customers and small and medium-sized businesses.

‘Definitely Beneficial'

The two transactions could make PPF the majority owner of the combined entity and it's “fairly likely” that this would trigger a mandatory buyout offer to the remaining shareholders, according to Duvieusart. Still, the group wants to keep the company traded on the stock exchange to maintain its publicity, access to capital and good credit ratings.

“We do not intend to delist Moneta at any point in time,” said the Home Credit CEO. “Especially for a financial institution the size of Moneta and the joint entity, being publicly listed is definitely beneficial for all the investors.”

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