Banks Pekao and Alior, both units of insurer PZU, terminated negotiations over a possible merger as they failed to agree on conditions most favorable for their shareholders, the banks announced.
The management Board of the Bank withdrew from further negotiations with Alior concerning the merger of both Banks,” Pekao said. „The Banks did not reach agreement on the terms and conditions of their merger, which in the opinion of the Management Board of Pekao would generate the highest added value for shareholders of Pekao,” Pekao’s filing read.
Alior’s filing mentions a lack of conditions which would „bring potentially the largest additional value for Alior Bank’s shareholders.” Probably the market will react positively to the news on no merger between Pekao and Alior. In our opinion, investors could feel uneasy about the merger as they feared a loss of growth profile by Alior on the one hand, and on the other hand – from Pekao’s perspective – they feared the risk connected with the merger itself, as well as a reduction in dividends. Risk of share issue and a cut in dividend payment in Pekao is gone. For Alior’s organic growth, the story remains unchanged. The market also expects PZU’s share price to react positively to the news.
