Bank of Cyprus Holdings rejected a takeover offer from Lone Star Funds for 1.51 euros per share.
The private equity group confirmed it had made the (cash) offer in a statement on Friday. The Bloomberg agency had earlier reported the news of the acquisition approach.
Under UK redemption rules, Lone Star has until 5pm. on September 30 to announce whether to bid. A Bank of Cyprus representative declined to comment.
Bank of Cyprus shares had earlier jumped as much as 23% on Friday. The stock was up 8% at 6:11 p.m. Greek time in London, giving the bank a market capitalization of around 455 million pounds ($537 million).
Dallas-based Lone Star, led by billionaire founder and chairman John Grayken, has a history of investing in banks and its portfolio includes Germany’s IKB Deutsche Industriebank and Portugal’s Novo Banco.
While many investors have chosen to stay away from banks, which are struggling due to old technology systems, regulatory framework and capital requirements, the sector is becoming more attractive as interest rates start to rise. To be sure, some investors still worry that future recessions and loan defaults will offset the growing gains from higher interest rates.
Bank of Cyprus is the country’s largest lender, offering everything from retail and commercial banking to life and general insurance. The company, which has its roots in the late 19th century, faced a “heavy” restructuring in 2013 in the wake of the Greek debt crisis.
As part of the €10 billion bailout package for Cyprus at the time, Bank of Cyprus absorbed its closest competitor, the People’s Bank of Cyprus, and recapitalized itself through the conversion of deposits into shares. Existing shareholders were almost completely wiped out and 21,000 customers who had deposits of more than €100,000 saw almost half their unsecured savings converted into shares worth €1 each.
Source: Capital
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