PRAGUE (Reuters) - Consumer finance group Home Credit pulled out of a planned deal to sell its Czech and Slovak operations as well as lender Air Bank to Czech peer MONETA Money Bank, balking at a call for a price cut.
The decision, announced by Home Credit on Tuesday, followed MONETA proposing to pay less for the assets last week, a move motivated by feedback from shareholders who feared overpaying and giving Home Credit and its owner PPF too much clout in MONETA through the cash, stock and debt deal.
“In 2018, the profitability and growth achieved by Home Credit Group’s Czech and Slovak assets not only met but exceeded the data presented to MONETA at the time the agreement was negotiated,” Home Credit said in a statement.
“As a result ... the request made by MONETA for a reduction in the valuation of the assets Home Credit Group would contribute to the transaction is not justified.”
PPF is the investment group of the Czech Republic’s richest businessman, Petr Kellner.
Under the revised terms of the deal, the cash, stock and debt transaction was worth 18.5 billion Czech crowns ($820.4 million), below the originally proposed 19.8 billion, MONETA said last week.
The deal, announced in October, was to be one of the biggest in Czech banking in years and would have bolstered MONETA’s position in a domestic market dominated by foreign-owned banks.
MONETA confirmed the end of talks in a statement and said management was open to any other potential tie-up deals. It also said it would continue to focus on outperforming the market through organic growth.
The revised offer involved issuing shares to the sellers as well as current and new shareholders, limiting the stake taken by Home Credit’s owners, investment groups PPF and EMMA Capital, to 15 percent instead of the previously proposed 24.48 percent.
The revised deal also limited the number of seats offered to Home Credit Group on the merged company’s nine-member supervisory board to one seat instead of two.
MONETA is owned in a 100 percent free float after General Electric’s financial wing listed the bank in 2016.
Reporting by Jan Lopatka and Jason Hovet in Prague; Editing by David Evans and Matthew Lewis