27.09.2022
Private equity firm Lone Star, in a statement published on the London Stock Exchange on Tuesday, said it did not intend to submit a revised offer to acquire Bank of Cyprus.
It should be noted that the firm is subject to the restrictions set out in Rule 2.8 of the Irish Takeover Rules. This section, which links to the section titled “Declaration of Intention Not to Offer”, under certain conditions allows the declaration to be cancelled, which in turn allows the firm to make a new offer within the next 6 months.
As previously reported, under Irish takeover rules, Lone Star had to either announce its intention to submit a final offer or notify that it did not intend to do so by 5:00 pm (Irish time) on September 30th at the latest.
The Board of Directors of the Bank of Cyprus has already unanimously and unequivocally rejected three unsolicited, conditional, non-binding offers from a US private equity firm, with the latest offer offering the bank €1.51 per share.
On September 6, a private equity firm announced that it was considering submitting a revised takeover bid for a Cypriot bank.
Meanwhile, a bill meant to enshrine in national law the European Union’s foreign direct investment (FDI) screening directive, which was presented to the Cabinet earlier this month and presented to the House Finance Committee on Monday, is due to pass. . submitted to the plenary session of the House of Representatives on Thursday.
A number of small changes were reportedly proposed at Monday’s finance committee meeting, including by the Cyprus International Business Association (CIBA) and the Institute of Chartered Accountants of Cyprus (Selk).
The proposals will be considered before the bill is presented to the plenary session of the House of Representatives. It should be noted that the State Legal Service undertook the task of including these proposals in the new version of the bill.
The bill describes the conditions under which an obligation to notify prospective foreign direct investment and obtain approval is created, as well as the criteria and factors that may be taken into account in the control of foreign direct investment.
It also defines the FDI control process, the type of information required in investment control, and the executive powers of the competent authority, which in this case is the Ministry of Finance.
In effect, the bill would allow the relevant finance minister to have a say in approving foreign direct investment from third countries in Cypriot companies.
The bill is directly related to the aforementioned takeover attempts by the American private equity firm Lone Star to take over the Bank of Cyprus.
Finance Minister Konstantinos Petrides has previously stated that “Cyprus must ensure the stability of its banking sector”, describing it as being in the public interest.
“If we see that dangerous and aggressive takeovers from abroad are taking place, then we should have the right to decide whether they should take place or not,” the finance minister added.
Following the rejection of official bids earlier this month, Lone Star sent a team to Cyprus to meet with senior executives and politicians to assess whether there was ground for a new bid.
The team of the private equity firm reportedly felt that neither the economic nor the political environment on the island created a real desire for the largest bank in Cyprus to be acquired by the firm, especially at a critical time for both the Cypriot economy and the stability of its banking system.
Moreover, at the meeting of the Finance Committee of the House of Representatives, many representatives and their respective parties declared by an overwhelming majority that they were against the acquisition of Lone Star Bank of Cyprus.
In response to Lone Star’s statement, the Board of Directors of the Bank of Cyprus released a statement on Tuesday confirming that it had not received any further offers from Lone Star following the rejection of Lone Star’s third offer dated July 22, 2022, noting that the rejected offers significantly undervalued the company and its future perspectives.
“The Board of Directors remains confident in the future prospects of the company and remains committed to pursuing its strategy of becoming a sustainable profitable institution that can continue to support the Cypriot economy,” said the Bank of Cyprus Board of Directors.
The Bank of Cyprus recently updated its medium-term strategic targets in February 2022 and raised its expectations in May and again in August 2022.
In addition, the board reiterated updated guidance given in August 2022, including ensuring a return on tangible capital of more than 10% in 2023 and, subject to regulatory approval and market conditions, returning to a meaningful dividend distribution from 2023.
“The Board of Directors remains confident in its ability to achieve its strategic goals by delivering high returns to shareholders over the medium to long term,” the Board concluded in a statement.
