Last week, NLB finally announced the conclusion of its voluntary takeover offer bid for Addiko Bank. According to the announcement, NLB managed to reach app. 36% of the shareholding, meaning that the 75% minimum holding condition was not fulfilled, and as such the settlement of the offer shall not take place. Furthermore, the offer will not be extended.
As a reminder, on 16 May 2024, NLB entered the race for the acquisition of Addiko Bank, offering EUR 20/share, above all other offers. The other offers, in this case, would refer to two Serbian people/companies, Agri Europe Cyprus and Alta Pay Group, both of which held app. 10% of Addiko’s shareholding at the time of NLB’s offer. Furthermore, Alta Pay Group also had optional agreements with several other shareholders, bringing their potential total shareholding to app. 36%. Agri Europe on the other hand, was planning on purchasing an additional 17% of the shareholding in the Bank.
Neither of these agreements took place later on, as it became known that Alta Pay Group wrongly disclosed their shareholding and the optional agreements were canceled, while Agri Europe did not proceed with its 17% offer. Furthermore, a 3rd Serbian company, Diplomat Pay, also with app. 10%, together with Alta Pay Group failed to disclose they were acting in concert during their acquisitions.
Coming back to NLB, its initial offer meant that it was ready to offer app. EUR 386m (excl. treasury shares) for Addiko Bank, with the offer lasting until 16 August 2024. While there was much speculation during the summer as to whether NLB would be able to acquire Addiko, some first snippets of doubt could be seen once the Group increased its offer by 10%, to EUR 22 per Addiko share. This would increase the overall offer to EUR 424m. As of last week, NLB finally published the results of the offer, during which they were able to reach 36% of the shareholding, below its 75% minimum. As a result, the offer did not go through, and the settlement of the aforementioned 36% did not take place. However, it is hard to say that the general market anticipated either outcome. While the situation with the other shareholders described above came coming out, and the share price has been increased, this was reflected in the market price during the last couple of weeks. This could mean that the market knew that the acquisition wouldn’t go through, but two things have to be pointed out: firstly, the overall market in Slovenia declined during this period, so it wasn’t NLB specific. Furthermore, NLB is on average, the 2nd most traded stock on LJSE after Krka, and it experienced a lesser decline compared to it.
NLB, SBITOP index price performance (2020 – 2024 YTD, %)
Source: Bloomberg, InterCapital Research
What could this mean for the future? While it’s all speculation at the moment, there are certainly several points worth noting. Firstly, NLB unveiled its 2030 business strategy only weeks before the announcement of the takeover offer, and in it, they outlined their goal of 2 M&As by 2030. As such, the Addiko M&A was more of a timely thing that came NLB’s way, and more M&A attempts in the region could be expected. Also, just because the offer failed this time, does not mean that NLB could not restart it at a later date.
Lastly, NLB has achieved strong results in the last couple of years, supported by solid loan production & elevated interest rates due to the ECB rate hikes. As such, it has recorded strong net income growth, which led it to already increase the dividend payment in 2024, and expectations moving forward. As one would expect that part of this would be allocated to any M&As, lacking these, it could be expected that NLB will increase its dividend payments even further. As such, this could be thought of in the matter of what brings value to investors: M&As and inorganic expansion can do that in the mid and long term, but the higher dividends can help in the short, mid, and long-term, but only if they remain sustainable. Considering that the 2 M&As were only supposed to contribute 20% to NLB’s 2030 goals (basically doubling of assets, recurring income, and net income), the 80% drive from the organic growth would be more than enough for sustainable & high dividend payments. Due to this, there still remains strong potential for organic & inorganic growth for NLB.
