Allied Irish Bank Eyes Controlling Stake in Rodovid Bank

This morning various news agencies reported that Allied Irish Bank is planning to buy a 60% stake in Rodovid (RODB: BUY). The price for the stake is about USD 450 mln, implying overall value of the bank at USD 600 mln. The deal is expected to be closed in the near term. Alexander Viktorov: If the deal is executed at this price, it values the bank at P/B ‘08E of 2.4x, above the current average of 2.0x, and implies price per share of USD 1,379, which is close to the current mid-market price, USD 1,399. On speculation of the deal, the mid-market price of Rodovid shares rose 6.3% yesterday, appreciating to near the rumored acquisition price. Allied Irish Bank has operations in Ireland, Britain, Poland and the US; it has about USD 26 bln in assets at its disposal and current market capitalization of about USD 19 bln. While we view Rodovid as an acquisition target and see Allied Irish Bank as a potential suitor, we believe that unless the deal includes other provisions, the current valuation looks low. Overall, the timing for banking acquisitions is less than ideal right now given that valuations of Ukrainian banks are at historical lows.