AT ONE fell swoop, the Cyprus Stock Exchange (CSE) yesterday threw out Marfin Popular Bank’s takeover bid for the Bank of Cyprus, saying it was in contravention of stock market procedure, and gave the nod to Piraeus’ rival offer for Marfin.
Following a marathon session of its board of directors, the body said Marfin’s offer for the acquisition of 35 to 100 per cent of BoC “cannot be examined, because this action is prohibited by regulation 21”.
The relevant clause on mergers and acquisitions states that a company launching a public offer cannot at the same time be a buy-out target.
Given that Piraeus’ bid for Marfin had come first, the CSE reasoned that Marfin’s tender for Piraeus and the BoC would hinder that process.
Later in the day, the CSE approved Piraeus’ public offer for Marfin, which has since been posted on the stock exchange’s website.
Yesterday’s decision was identical to that reached almost two weeks ago by the Securities and Exchange Commission. Marfin, however, had challenged that verdict, arguing that the SEC was not the competent authority to rule on these matters.
The bank took its case to the Supreme Court and won – a development that reawakened the specter of two counter-bids running in tandem, in a situation without precedent in either Cyprus or Greece.
Yesterday’s verdict by the CSE was a setback for Marfin, which must now fend off Piraeus’ bid before making any new aggressive moves of its own.
There was no immediate reaction from Marfin yesterday.
For its part, the BoC was extremely pleased with the latest turn of events, with the bank’s deputy CEO Charilaos Stavrakis calling the decision a “triumph” for the bank.
BoC turned down Marfin’s offer as “seriously risky” for shareholders because Marfin has still to integrate three acquisitions made in the past six months. Next, the BoC’s board rejected a friendly cash-and-shares offer by Piraeus for 100 per cent of the bank.
Marfin, with a market capitalisation of $8.9 billion, was formed in a triple merger of Marfin, Egnatia Bank and Cyprus Popular Bank late last year
The latest three-way combination proposed by Marfin would create Greece’s biggest bank, with more than 1,000 branches.
The bid for BoC has caused concern at the Central Bank over competition in the island’s small financial market.
Assuming the deal went through, Marfin would control more than 55 per cent of the Cyprus banking market.
In another twist, the SEC has appealed the Supreme Court’s decision that had gone Marfin’s way.
SEC chairman Giorgos Charalambous yesterday called for the enactment of legislation spelling out which body should be the stock market watchdog. Current regulations are hazy on this point.
According to the official, a recent EU directive clearly designates that securities and exchange commissions are the competent regulatory bodies in their respective countries, and that consequently Cyprus should go along.
He went on to warn of “unforeseeable consequences” unless the respective jurisdictions of the stock exchange and the SEC were ironed out.
Charalambous also hinted that the confusion was proving an embarrassment for the island abroad, because it gave the impression that the local stock market was a free-for-all, where no one knows what they are supposed to do.
The SEC’s appeal at the Supreme Court will be heard on Friday.
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