Banca Intesa Raises Price for Ukrsotsbank, Extends Offer to Minorities.

Banca Intesa announced today that it had renegotiated the terms of its purchase agreement for a controlling stake in Ukrsotsbank. According to Intesa’s press statement, the new agreement values Ukrsotsbank at $1.4 bn and Banca Intesa will acquire an 88.55% stake, which implies a purchase price of just under $1.24 bn. The valuation is up 6.9% from the previous agreement announced in February, when Intesa agreed to pay $1.16 bn to acquire an 88.1% stake, valuing Ukrsotsbank at $1.31 bn. Intesa said it was also prepared to buy up to 100% of Ukrsotsbank’s shares and would extend a “put” option to minority shareholders, which the statement implied would be based on the $1.4 bn valuation, or $0.38/share. Ukrsotsbank shares currently trade at about $0.30. However, Intesa said completion of the transaction depended on a “definitive” resolution of a lawsuit in the US in which Ukrsotsbank was involved in, in Ukrsotsbank’s favor. If the acquisition is not completed by March 31 2007, Intesa and Ukrsotsbank’s controlling shareholder (Viktor Pinchuk) have the right to cancel the agreement or renegotiate it. The announcement comes after Intesa’s original acquisition agreement was held up by protests from minority shareholders, including one of Pinchuk’s estranged former partners and the Privat business group, who together own around 8% of USCB’s shares. Intesa did not describe the lawsuit that it mentioned, and we have heard there could be more than one. However, we believe Privat and the others will find a way to drop their complaint against Ukrsotsbank and cash in on Intesa’s offer to minorities. However, there is a small risk that the suit could drag on and delay or even ruin the deal.