Cesky shareholders reject final Deutsche offer

KPN and Swisscom have rejected Deutsche’s offer for their joint stake in Cesky Telecom, ending the German bank’s prospects of acquiring the Czech telecom.

A consortium led by Deutsche Bank has failed in its attempt to acquire Czech telecom operator Cesky Telecom after two of the company’s major shareholders rejected a final offer for the business.


The German bank and Danish telecom company TDC had been given until Tuesday of this week to come to an arrangement with Telsource, the joint venture between KPN and Swisscom, over a price for the 27 per cent stake it currently holds in the business. The Czech government is now expected to cancel the three-year privatisation process at its cabinet meeting next Monday, according to the Financial Times.


To make the deal work, Deutsche Bank needed to acquire at least 90 per cent control in order to merge its bid vehicle with Cesky Telecom. In addition to Telsource’s 27 per cent stake, KPN separately holds a seven per cent interest. KPN is thought to be holding out for a similar deal to that achieved by the Czech government, which accepted just over E11 per share, valuing its stake at E1.82bn.


The deal has been beset with problems since the sale of the government’s stake was first mooted late last year. A change of government in the Czech Republic slowed the deal and a refusal on the part of prospective buyers to meet the government’s asking price of around E2.5bn for the business also threatened to scupper the transaction.


Recently Deutsche Bank struggled to raise debt for the transaction, which would have been the largest deal to complete in the region. The deal has also been complicated by a reduction in KPN’s need to sell its stake, having successfully reduced its debt from a high last year of E23bn to a projected E13bn by the end of 2002.


Despite the deadline passing, KPN has refuted claims that the sale of Cesky Telecom has collapsed. Speaking to Reuters, KPN spokesman Bram Oudshoorn said: “We are still in talks with all parties.”