If the first phase of the M&A deal between VTB and TCB ends this month, VTB could get a chance to consolidate a controlling package in Transcreditbank as soon as 1Q2011. In our opinion, the scheduled acquisition price is favorable for both VTB and its shareholders.
On December 29 and 30, VTB reported it has successfully completed the initial two stages of the M&A transaction with Transcreditbank (TCB). In bulk, VTB has acquired 41.7% of TCB shares.
We regard the news as moderately positive for VTB and believe it could buy a controlling interest in TCB as soon as 1Q2011 and get a chance to consolidate the bank results on its books. VTB management has scheduled the ultimate transaction value at 2x TCB equity, which is quite inexpensive for a bank with an over 25% ROE. VTB now trades at 1.7x its 2011 BV and has an anticipated 2011 ROE of 13%.
Our 12-month target for VTB (RTS: VTBR) is USD 0.0038 per share with a HOLD rating.
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