A merger between Eurobank and real estate investment company Grivalia is being touted in Greece as a major deal moving Greek lenders forward in their battle with bad loans but the agreement is not pleasing everyone. According to investment bank Wood, the merger has landed Grivalia shareholders with the "short end of the deal".
In a note, the investment bank says that the proposed share exchange offer, of 15.8 Eurobank shares for one Grivalia share, translates into a price of 7.40 euros for every Grivalia share (based on Friday's prices). This provides a 3 percent premium to Friday's close for Grivalia shares and is 21 percent below its last reported per share net asset value of 9.38 euros.
In addition to the share exchange offer, Grivalia said on Monday that it will redistribute 0.42 euros per share to its shareolders via a share capital reduction. This, notes Wood, "should be viewed as the early payment of a regular dividend (we expected Grivalia to distribute EUR 0.36/share in March). As was confirmed during the conference call, following the early dividend, Grivalia will not be paying a regular one from its 2018 expected profit."
Wood had a 9 euros per share price target on Grivalia, indicating upside of some 25 percent from current levels.