On April 14, VTB offered to buy out minority shareholdings in VTB North-West at USD 1.92 (RUB 45) per share, which corresponds to the current stock prices. The buyout offer is valid through June 23, 2008. The deadline for cash transfers to shareholders' accounts is July 23, 2008.
The offer price is on a par with the highest price paid by VTB for VTB North-West shares in the six months before the buyout offer, which is in line with the current law on joint-stock companies.
In our view, many shareholders are likely to prefer to accept the buyout offer in view of the risk that VTB could amass 95% in the bank in the wake of the buyout offer and then announce a forced buyout offer at less attractive prices. What is more, quotes for the bank's shares could fell below the offer price, give the current conditions in the world capital markets and slackening demand for financial sector shares on the part of investors. In view of this, it would be reasonable to accept the buyout offer. At present, VTB holds 86.5% in VTB North-West. Consolidation of 100% of VTB North-West capital may act as a short-term upside driver for VTB's current stock valuations.
We estimate the fair price of VTB at USD 0.0053 per common share, with an upside of 37%, which corresponds to BUY recommendation. As regards VTB North-West shares, the offer price is to be a price guidepost for investors in upcoming months in the absence of other fundamental drivers for the stock.
0.553
1.6
