Yesterday, NLB published an announcement that they have decided to increase the share offer price for the acquisition of Addiko from EUR 20 per share to EUR 22 per share, on cum dividend basis. This represents an increase of 10% and implies a total takeover transaction (if 100% shareholding is achieved) of EUR 429m, as compared to EUR 390m in the initial offer. This also represents an increase in the P/B of the acquisition, from the initial 0.48x to the new 0.52x.

Ever since NLB announced its intention to acquire Addiko, there has been much speculation about whether the Group will be able to acquire Addiko. The main reason for this doubt is the fact that two Serbian businessmen, through Agri Europe Cyprus, and Alta Pay Group, have acquired 9.99% and 9.63% of Addiko’s shareholding recently, respectively. Furthermore, Agri Europe Cyprus also offered to purchase another 17% stake in Addiko. Alta Pay Group also had agreements with several other major and minor shareholders, bringing their shareholding to a total of over 36%.

However, recently this Company decided to drop out of these agreements, which came after it was revealed that only 31% of shareholding through conditional agreements was reported, instead of 36%. While it is unknown whether this had any effect on the other shareholders stopping these agreements, whether Alta Pay Group decided to drop it themselves, or whether the NLB offer was the most enticing, Agri Europe Cyprus and NLB are the only ones right now who remain in the race for the acquisition.

On 7 June, NLB launched an all-cash voluntary takeover for the acquisition of Addiko shares for EUR 20 per share cum dividend. This also coincided with the period during which Agri Europe Cyprus was also in the process of acquiring an additional 17% in Addiko, which would bring its total shareholding to 27%. The offer by Agri Europe Cyprus amounted to EUR 16.24 cum dividend, which means that NLB offered significantly more for the acquisition.

Speculation has been abound about whether NLB will be able to acquire Addiko, and how much of it. One of the main reasons for this is the fact that NLB aimed at the majority, even if not full control, with a minimum goal of 75% in Addiko’s shareholding. Even before this new offer, NLB’s offer would imply a transaction of EUR 390m at 100% of shareholding, implying a P/B ratio of 0.48x. The new offer, updated yesterday, increases the offer to EUR 22 per share cum dividend, which would mean that the total transaction amounts to EUR 429m, with a P/B of 0.52x, an increase of 10% compared to the initial price.

As compared to the 6-month volume-weighted average share price (VWAP), this is a premium of 34.4%. It also implies a premium of 15.8% compared to the closing price on 14 May 2024, before NLB’s announcement, and a 45.2% premium as compared to the share price on 22 March 2024, the last closing price before Agri Europe Cyprus announcement of its partial tender offer for Addiko shares.

As a reminder, Addiko’s acquisition would expand market shares across many markets that NLB is present in, including Slovenia, Bosnia & Herzegovina, Serbia, and Montenegro. At the same time, it would also allow indirect entrance into the Croatian market. NLB’s CEO also added that they are very pleased that Addiko’s Management Board is of the view that NLB as a universal regional systemic bank presents a coherent strategy regarding the future of Addiko.

The acceptance period for the takeover offer is 16 August 2024.

Total transaction value, P/B of transaction offers for Addiko Bank (as of 16 July 2024, transaction value in EURm)*

Source: NLB Group, Addiko Bank, Austrian Takeover Commission

*Agri Europe Cyprus aimed for a partial takeover, of 17%. Presented here is only the transaction amount for said 17%.

Overall, this could be seen as a positive development, both for NLB and Addiko shareholders. The offer for the total acquisition is sure to suit investors more than a partial takeover offer, especially when we consider the significant premium in NLB’s offer as compared to Agri Europe Cyprus. As such, this could surely lead to higher chances of success for the entire acquisition endeavor launched by NLB Group.

Housing and rents, two answers to the same question of “Where and how do I live”, are strongly influenced by market dynamics and developments, especially in the EU which allows free travel between member states. Today, we bring you an overview of the housing & rent price development in the EU, based on the latest Q1 2024 data released by Eurostat just a couple of days ago. A special focus is made on Croatia.

Due to its importance to our lives, housing gets significant attention in the media. While not as developed in Croatia as in some other European countries, rents are also starting to become more and more prominent, but housing still plays by far the most major role. Given the inflationary pressures we have seen in the last couple of years, and the 2nd use of housing as a form of savings, how have the prices developed since 2015?

Housing prices change in the EU vs. 2015 (2015 – Q1 2024, %)*

Source: Eurostat, InterCapital Research

*Greece is excluded from the list as no data is available

Looking at the chart, the largest increase was recorded in Hungary, where housing prices grew by almost 188% compared to 2015, followed by Lithuania at 127.7%, and Czechia at 114.3%. In fact, out of the 26 countries represented here, 7 recorded 100% or more growth in the last 9 years, and what’s also interesting is that these include many developing Eastern European countries. This is to be expected, as these countries were growing faster than the EU average, and with the development of the living standards in these countries, higher prices were also expected.

Furthermore, traditionally home ownership in these countries is more prominent, as compared to the more rent-focused countries of Northern and Western Europe. On the other hand, Finland recorded growth of only 1.9%, supported by various Government policies, steady housing supply, and slower urbanization as compared to other EU countries, but also slower economic growth and a stagnant population, especially in the last couple of decades. A similar situation is present in Italy, with only 8.6% growth, also influenced by high homeownership, stagnant population, and of course the significant challenges faced by the economy.

Lastly, Croatia recorded 89% higher prices since 2015, under the influence of lower supply & high demand, the usage of housing as a form of investment, investments from foreigners, especially from the EU, and the general improvement of the standard of living, as well as of course, the inflation which was also significant in the sector in 2022 and 2023, and even partially now in 2024. Compared to the EU average of 49.1%, this is app. 40 p.p. higher, placing Croatia somewhere in the middle of the list, mainly due to the influence of outliers on both sides (Hungary, and Finland for example).

Rent prices change in the EU vs. 2015 (2015 – May 2024, %)

Source: Eurostat, InterCapital Research

Looking at the 2nd answer to the housing questions, rents have also experienced growth as well during the period, albeit to a lesser extent. Up until May 2024, rent prices have grown by 84% in Hungary, followed by 73.8% in Lithuania, 70.5% in Slovenia, 65.6% in Poland, and so on. While there are many different reasons, each depending on the country for this, the main factors can be summarized as follows: firstly of course, economic growth which usually attracts people into cities, leading to urbanization. Depending on the supply & demand of housing, as well as how developed the construction sector is, rents are indirectly raised if there isn’t a balance in the supply, and if new construction cannot be done due to lack of sufficient eligible companies. Secondly, available areas can also play a role, such as in the Baltic countries of Lithuania and Estonia, smaller members such as Slovenia, or tiny island nations such as Malta.

For Croatia however, the situation is far better when compared to housing prices, with rents increasing by “only” 24%, which is even below the inflation rate since 2015 (app. 31% in this period). Home ownership still dominates the Croatian public discourse, with a focus on it leading to steady price growth, supported by newly issued loans which have expanded the balance sheets of Croatian banks the most during this period. Rent has been discussed as a possible solution, with many different ideas such as Government subsidized rents, or local initiatives to construct more housing, especially for rent. However, as is evident in the rents’ growth as compared to housing, this has yet to take root. This isn’t likely to change much, as rentals are for the most part tied to tourism in Croatia, with beneficial taxes in the sector which also aren’t likely to change much soon. Foreigners also play a role in this, in a twofold way. First is the purchase of apartments and houses for lower prices compared to more developed EU countries and renting them out for stable returns. The 2nd is the newest trend, which is related to third-world foreign workers, who when they arrive in the country have to have their accommodation taken care of, which is usually done for a lot of workers at once through rentals.

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