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The financial investment firms (SIFs) could be forced to allocate significant budgets to initiate the mandatory public takeover bids for some of the companies in their portfolio after the National Securities Commission (CNVM) decided to clarify this aspect of the capital market, which shareholders frequently overlooked. Anticipation of potential takeover bids animated the Bucharest Stock Exchange upon the publication of the CNVM instruction and the start of the public consultation process on this matter.
The market enthusiasm stirred by the CNVM initiative which brings additional clarification regarding the obligation to make public takeover bids for indirect holdings, too, is not exactly shared by the CEOs of the SIFs, who point out that the idea could prove counterproductive for the Stock Exchange on the long-term. "It is a shame to make public takeover bids and take companies off the market just for the sake of compliance. From the point of view of a SIF, the more companies there are, the better it is," SIF Banat-Crisana CEO Ioan Cuzman told BURSA. "In a first phase, these bids may increase the liquidity of the market, but it is not sure what will happen after the bids are over," he added.
SIF Transilvania"s portfolio includes holdings of over 33% in several companies, but the cost of launching the public takeover bids would be too great and entirely unjustified, said SIF3 Transilvania CEO Mihai Fercala. "It is illogical to force me to prepare useless and expensive documentation, especially during a crisis, just because there are speculators who are insisting in this respect in order to get rid of some deadweight stock," Fercala said emphasizing that takeover bids would slow down market transactions.
"Whoever wants to sell shares, can sell under the current conditions of the market. Some investors could decide to limit their investments in order not to exceed the 33% threshold and be forced to make public takeover bids, knowing what that means," Fercala added. According to him, the obligation to make a public takeover bid could force SIFs to incur costs almost impossible to bear. "Let"s suppose that we do not have the money to make the takeover bids. Will they force us to sell the shares that we already have? What will they do if we don"t want to sell for the current market price?" Fercala wondered.
On the other side of the opinion spectrum, SIF Oltenia is favouring the obligation to launch takeover bids, after having recently won a lawsuit against a shareholder who had initially refused to make a public takeover bid. "Public takeover bids bring a number of advantages to the minority shareholders of a company," said SIF5 Oltenia CEO Tudor Ciurezu. He believes that the CNVM project to make takeover bids mandatory even for indirect holdings should only apply from the moment when it comes into effect, without any retroactive application.
In turn, SIF Muntenia recently started the procedure for taking over one of the companies in their portfolio, SIF4 Muntenia CEO Petre Pavel Szel told BURSA, without naming the company. "People are aware of the rules when they enter the game. If you are caught unprepared in a situation where you need to make a takeover bid, it does not mean that you are excused from the law," Szel said.
The Bucharest Stock Exchange is currently running three public takeover bid, with a fourth one, Comvex - Constanta, being suspended in court.
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