PRAGUE (Reuters) - Shares in Central European Media Enterprises (CME) (CETV.PR) (CETV.O) fell sharply in Prague on Tuesday as some investors ditched the stock after AT&T’s (T.N) deal to sell its majority stake to Czech investor PPF missed price expectations.
The $2.1 billion deal will mark the exit of CME’s largest shareholder as the U.S. telecoms giant sells non-core assets to reduce debt.
It also expands the reach of PPF - owned by the Czech Republic’s wealthiest businessman, Petr Kellner - in the media and telecommunications landscape across central and eastern Europe.
Nasdaq- and Prague-listed CME operates television stations in the Czech Republic, Bulgaria, Romania, Slovakia and Slovenia.
Under the agreement, CME’s common stockholders will receive $4.58 a share, a 32% premium to the stock price before CME announced a strategic review in March that brought up the chance of a sale. But it was below Friday’s closing price of $4.65.
The dual-listed shares sank in Prague on Tuesday when markets reopened after a holiday weekend, falling 6% to 101.00 crowns ($4.38) at 0912 GMT. They had closed down 5.2% at $4.41 on the Nasdaq exchange on Monday.
Analysts said investors had expected a better price per share given the recent stock and company performance. Shares had traded as high as $5.03 this month.
Shareholders also had little chance to fight for a higher price before the deal’s completion expected in the middle of next year.
“The expectations were higher recently so I would say it is rather a disappointment for this price,” J&T Banka analyst Pavel Ryska said.
AT&T inherited CME after it acquired Time Warner in 2018. It owns 64% of CME’s common stock but effectively controls 75% when factoring in preferred shares.
Under companies law in Bermuda, where CME is registered, a merger becomes binding if it is supported by 75% of shareholders and sanctioned by court. Dissenting shareholders can only ask for a reappraisal of the price.
Analysts said this would be complicated for many.
“In our opinion, a better approach would be to realize gains now through a sale on the market rather than wait for the $4.58 per share payout or speculate on a potential offer increase,” Ceska Sporitelna analyst Petr Bartek wrote.
Reporting by Jason Hovet, editing by Louise Heavens