The value for 100% shares of Optima Telekom (EV) on a debt free, cash free basis and amounts to HRK 639m which represents EV/EBITDA (before one-time items after leases) of 5x.

On Friday, Zagrebačka banka (ZABA) and HT have signed an agreement with Telemach Hrvatska (priorly TELE2) owned by United Group on the sale and purchase of the shares of the Optima Telekom. The subject of the transaction is sale of total of 54.31% shares of Optima Telekom out of which 36.90% are owned by ZABA, while 17.41% are owned by HT.

Sale and share purchase agreement determines the value for 100% shares of Optima Telekom (enterprise value) on a debt free, cash free basis and amounts to HRK 639m which represents EV/EBITDA (before one-time items after leases) of 5x. Total expected proceeds for HT is yet to be determined based on predefined contractual parameters, however the share price as agreed in the agreement will be lower than the 3 month volume weighted average from the regulated market that would be implemented by the buyer in the mandatory takeover bid (volume weighted average of Optima Telekom share price in the regulated market within 8 April and 8 July 2021 period).

We note that the aforementioned sale and purchase agreement triggers a takeover bid for the rest of Optima Telekom shares. The minorty shareholders should receive a 3 month volume weighted average price, meaning HRK 5.36 per share. This indicates a premium to the current market (Friday closing) price of 26.1%.

As a reminder, HT acquired its shareholding in Optima Telekom by debt to equity swap within the pre-bankruptcy settlement procedure and acquired management rights based on the agreement with Zagrebačka banka. Back in 2014, based on the Management Agreement signed between Croatian Telecom and Zagrebačka banka, the Croatian Competition Agency (AZTN) gave its conditional approval to the concentration of Croatian Telecom and Optima Telekom for a limited period of four years, which was later extended to 10 July 2021.

United Group’s acquisition of Optima Telekom was long speculated by the market and media ever since the Group announced that the Swedish Tele2 AB announced the sale of their Croatian subsidiary than called Tele2 Hrvatska (now called Telemach). Back in 2019, it was speculated by the media that United Group might be interested in acquiring Optima Telekom, as the company’s business is majority related to fixed broadband, which is a segment TELE2 Hrvatska (now Telemach) does not operate in. Such an acquisition would lead to a consolidation of all majority telecom segments on the Croatian market by the United Group. As a result of the aforementioned, Optima Telekom’s share price surged in 2019, with OPTE being by far the best performing CROBEX constinuent (+370% in 2019).