* MONETA proposed $877 million bid for Air Bank in Oct
* Biggest deal in Czech banking in years
* MONETA needs its shareholders’ backing for bid
* Also trying to negotiate a “more palatable” deal
* (Adds more comments on deal, profit results)
By Jason Hovet
PRAGUE, Feb 6 (Reuters) - MONETA Money Bank aims to let its shareholders participate in a share issue to finance its takeover of Air Bank, its chief executive said, as the lender seeks investor backing for one of the biggest deals in Czech banking in years.
MONETA is also trying to negotiate a “more palatable” valuation for the deal, CEO Tomas Spurny said on Wednesday.
The lender’s proposed 19.8 billion crown ($877 million) cash-and-stock deal to buy rival Air Bank from Home Credit Group, announced in October, will give MONETA heft in a competitive banking market dominated by foreign-owned players.
MONETA will also buy the Czech and Slovak consumer finance businesses of Home Credit Group, part of the PPF empire of Petr Kellner, the Czech Republic’s richest man.
MONETA said last month that it was re-negotiating some conditions of the deal after investor feedback and Spurny said on an earnings call on Wednesday that they would include giving existing shareholders the chance to maintain pre-emptive rights.
Under the proposed takeover, MONETA had said it would pay Home Credit 6.75 billion crowns in cash and issue 165.6 million in new MONETA shares, valued at 13 billion crowns, giving Home Credit a 24.48 percent stake in the merged entity.
Spurny said MONETA was now “negotiating a structure where the (Home Credit Group) stake in the bank will be fundamentally, materially lower.”
“MONETA’s objective is to ensure the existing shareholder base has the ability to participate in the capital increase and effectively regulate the size of (the Home Credit Group) stake,” he said.
“The discussions (with Home Credit Group) have been very constructive,” Spurny said. “I am fairly optimistic that both sides understand the magnitude of the opportunity.”
MONETA also plans to issue debt as part of the acquisition and Spurny said another objective was that Home Credit would take a portion of that debt.
MONETA shares were up 2 percent at 78.70 crowns at 1021 GMT. They are down 4 percent since the announcement of the Air Bank deal, which would create the third-largest Czech retail bank by branch network.
Home Credit Group is active in consumer lending around the world. It is 88.6 percent owned by Kellner’s PPF group. Emma Capital, controlled by Kellner associate Jiri Smejc, owns 11.4 percent.
MONETA, which is owned in a 100 percent free float after General Electric’s financial wing listed the bank in 2016, reported on Wednesday a 7.1 percent rise in 2018 net profit to 4.2 billion crowns. That was above its guidance of 4.1 billion crowns and it proposed a higher-than-expected 6.15 crown-per-share dividend.
Also on Wednesday, Air Bank and Home Credit CZ&SK reported a combined net profit of 1.5 billion crowns for 2018, up from 1.3 billion crowns the previous year. ($1 = 22.5800 Czech crowns) (Reporting by Jason Hovet; Editing by Susan Fenton)