VTB purchases the Moscow city government’s stake in Bank of Moscow
VTB purchased a 46.48% stake in Bank of Moscow (BoM) and a 25%+1 share in SSG (which controls 17.3% of BoM) from the city’s government on Tuesday, Vedomosti reports.
VTB paid RUB 103bn for the stake, implying a RUB 203bn valuation for the whole bank – a 14% increase over the city’s previous valuation of RUB 178bn, but below the RUB 240-280bn target announced by BoM President Andrei Borodin on Monday.
We welcome the news, as we believe the uncertainty regarding the BoM acquisition was creating negative sentiment for VTB. While the deal is not yet done, VTB made a significant progress by purchasing the Moscow government’s stake.
VTB does not yet control BoM (it only has a blocking stake in SSG), but it is now positioned to increase its stake to over 51%: Vedomosti reports that two other BoM shareholders – Goldman Sachs, with a 3.88% stake, and Credit Suisse, holding 2.77%, voted under top-management guidance and were not able to sell the stakes unless the city government decreases its stake in BoM.
We believe that VTB is likely to focus on Goldman Sach’s stake, as it would give it control over BoM. We note our continued concerns over the total price at which VTB would purchase the asset: the bank already acquired a 46.5% stake with a 14% premium to previous valuation, and it could have to pay even more for 100%, given BoM management’s reluctance to lose control and sell shares at the current valuation.
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