Group PPF and the Board of Directors Moneta Money Bank agreed on the details of the third attempt to connect Moneta with Air Bank, Czech and Slovak Home Creditem and companies Benxy (by the operator Zonky). According to them, the new proposal caters to Moneta’s smaller shareholders, who will merge this June refused due to disagreement with funding.
“PPF continues to promote its vision of creating a strong domestic bank with Czech capital. The merger of the Air Bank Group with Moneta seems to be a very suitable, but not exclusive, platform for this purpose. In a situation where the financial and commercial results of the Air Bank Group significantly exceed the original investor expectations, and the prospect of its further appreciation has increased significantly, this is also the last opportunity for Moneta’s shareholders to support the merger intention. If it does not approve the transaction, PPF will no longer support the sale of its assets to Moneta, “PPF wrote in an official announcement.
But this time it should work. PPF has backed down and does not insist on acquiring an absolute majority of the shares in the merged bank immediately. It will now offer the existing shareholders the pre-emptive right to subscribe for new shares with which Moneta will pay the vast majority of the purchase price to the PPF Group. “The sale of the Air Bank Group to Moneta is no longer conditional on the PPF Group gaining control of Moneta,” PPF writes.
New shares at a discount
The first part of the transaction, which the shareholders agreed at at the June General Meeting, remains unchanged: Moneta will buy Air Bank a spol. for 25.9 billion crowns. “The purchase price remains unchanged from the original agreement in the first half of this year, despite better-than-expected financial performance and profitability,” stress PPF and Moneta’s management.
The second part – the capital increase or the issue of new Moneta shares – was rejected by smaller shareholders in June. PPF now comes up with a new design, which, in its view, removes “all substantive and substantiated objections and reservations raised by certain shareholders”. Moneta is to increase its equity through a two-round offer of new shares, which will be available to all shareholders of Moneta. He wants to “dilute” the current 511 million shares by adding 255.5 million new ones.
In the first round, all shareholders will be able to subscribe for all shares at an issue price of 82 crowns per share – ie with a discount compared to current market price, which in recent weeks has been mostly around 88 to 90 crowns. Every two existing shares will allow their owner to subscribe for one new one.
If any new shares remain unsubscribed after the first round, the bank will offer them to all shareholders in the second round at an issue price of CZK 90, which is slightly higher than the final price of Thursday’s trading on the stock exchange (CZK 89.25).
PPF thus practically attracts smaller shareholders to the opportunity to earn eight crowns per share. Thanks to the price commitment in the second round of subscription, CZK 90 should be the new market minimum, he says. And most importantly: PPF promises that CZK 90 per share will represent the minimum price at which it would make a possible takeover bid to all shareholders, if it then controlled the company.
The new financing model must again be decided by the general meeting. It is scheduled for December 20. At the same time, it will approve the payout dividends in the amount of three crowns per share. At the same time, Monety’s Board of Directors expects to propose the payment of another dividend of seven crowns in the first half of 2022 before settling the proposed acquisition.
The dream of the largest Czech bank
The first plan to merge Monety and Air Bank was made in October 2018. The transaction, which was to be the largest in the banking market since the end of the millennium privatization, assumed, among other things, that the merged bank would be called Air Bank – according to surveys. and more popular. The first courtships failed in February 2019, the companies did not agree on a price.
The second connection attempt began in January this year. PPF wanted to acquire the largest stake in Moneta and then sell Air Bank, Home Credit and Zonka to Moneta. Thus, Moneta would formally buy Air Bank, but in reality PPF would control Moneta in addition to its existing companies. PPF takes advantage of the fact that Moneta’s ownership structure has been very fragmented since its inception. Thanks to the repurchase from the existing shareholders, during which it offered them 80 crowns per share, Moneta acquired a share of almost 30%.
The critics did not like the high price at which Moneta should buy companies from the PPF group. According to them, minority shareholders would pay for the transaction.
The merged bank is to be three on the market according to the number of clients – more than 2.4 million. It would thus rank behind Česká spořitelna and ČSOB, overtaking Komerční banka. The volume of deposits may be the fourth largest (after ČS, ČSOB and KB), in the area of consumer loans even the number one (before ČS) – all according to numbers at the end of last year. Total revenues are expected to rise, while costs are to fall due to synergies. At the same time, it would be the largest Czech bank – it would overtake Fio, Creditas and Trinity.
Moneta Money Bank has existed since the spring of 2016, following on from Agrobanka, which has been operating in the Czech Republic since the 1990s. After the collapse of Agrobanka, its healthy part was taken over in 1998 by the American group General Electric, merged with the installment company Multiservis and renamed GE Money Bank. With the listing of its shares on the stock exchange in 2016, GE practically sold it. The bank is now run by Tomáš Spurný, who previously worked for PPF, among other things. Last year, Moneta strengthened the mortgage bank and building society Wüstenrot, with a total of about 1.4 million clients. In 2020 – affected by the creation of reserves due to the coid – the Moneta Group achieved a net profit of 2.1 billion crowns, in 2019 it was four billion.
Air Bank has been operating since the autumn of 2011, focusing on regular retail clients – it has over 900,000 of them. It attracts on account for free or with minimal fees, until recently it also offered one of the best interest-bearing savings accounts. It came up with several innovations – for example, it was the first to allow the choice of the value of individual banknotes when withdrawing from an ATM. In 2019, it achieved a net profit of 1.5 billion crowns. In 2020, PPF published only the result of the entire Air Bank group, which includes the Czech and Slovak Home Credit and the loss-making company Benxy (Zonky) – net profit coincidentally reached 1.5 billion, which means a year-on-year decrease of 15.6% .
