DTEK wins auction for 40% of Donetskoblenergo

DTEK (DTEKUA) was named the winner of yesterday’s privatization auction for 40.1% of electricity distributor Donetskoblenergo (DOON UK). DTEK bid UAH 467.6 mln for the stake, 4% more than the auction’s starting price; the implied deal value is UAH 17.55 per share, a 784% premium to the market (last deal).

Alexander Paraschiy: As we expected, the second bidder for Donetskoblenergo, Luhansk Energy Union, did not represent true competition to DTEK for the stake. We believe DTEK was the only company interested in Donetskoblenergo and at the same time is able to facilitate the restructuring and repayment of Donetskoblenergo’s UAH 3.9 bln in debt to the wholesale energy market operator. We do not expect any market reaction to the privatization news for Donetskoblenergo shares, unless DTEK offers to buyback minority shareholdings.