OP-Pohjola Group eyes full Pohjola acquisition

Finland’s OP-Pohjola Group is seeking to fully acquire Pohjola Bank, having today (Thursday) announced a tender offer for all the shares of the bank that it does not already own.

OP-Pohjola Group Central Cooperative announced a public voluntary bid for all outstanding shares of Pohjola at a bid price of Eu16.8 per share, valuing the transaction at Eu3.4bn.

The central unit of the co-operative banking group, together with the cooperative banks and the group’s related entities, holds around 55.4% of shares in Pohjola, and 75.8% of the related voting rights.

Pohjola-Group announced full year results today.

“The main reasons for the tender offer are the high degree of concentration of voting rights in Pohjola, Pohjola’s non-independent role as part of a conglomerate of cooperative banks and the need for more centralised steering of the Group resulting from new tightening regulation,” said Reijo Karhinen, executive chairman of OP-Pohjola Group. “A model consisting of two different types of ownership structures is no longer functional.”

Pohjola Bank said that it “recognises the industrial logic underlying the bid”, which includes a premium of 18.1% from the closing price immediately before the announcement of the bid and a premium of 16.6% with respect to the weighted average trading price over the past three months.

The bank said the bid is “a reasonable alternative for shareholders” given prevailing circumstances such as the changing regulatory environment, including higher capital requirements, facing Pohjola.

Fitch today affirmed OP-Pohjola Group’s issuer rating at A+ on the announcement of the tender offer, saying that the transaction is “strategically positive for the group, enabling it to strengthen internal capital generation and allowing for further structural rationalisation.”

It expects the negative impact on the group’s capitalisation to be significant, but that this will be fully offset over the next two years by measures implemented by the group.

Standard & Poor’s, meanwhile, placed Pohjola Bank’s ratings (AA-) on CreditWatch negative on Thursday because of the planned share buyback.