Cosmote to wed Germanos in deal at the wish of parent company OTE

Mobile operator Cosmote has entered into talks to purchase a controlling stake worth around 500 million euros ($634 million) in phone accessories retailer Germanos, a move seen as boosting it at home and in the Balkans. Greece’s leading mobile firm by users said yesterday it was in exclusive talks with Panos Germanos, the founder and major shareholder of Germanos, to buy a 34.3 percent stake valued at 504 million euros based on current prices. «A deal with Germanos, if it is finally concluded, will give Cosmote a lead over competitors in Greece and access to Germanos’s expanding network in Eastern Europe,» said analyst Vangelis Karanikas at HSBC Pantelakis Securities. Germanos has around 330 outlets in Greece and another 600 in Poland, Romania, Bulgaria, Cyprus, the Former Yugoslav Republic of Macedonia (FYROM) and Ukraine, with plans to expand into Turkey and Serbia this year. It offers products from Cosmote, Vodafone Greece and TIM Hellas. Cosmote, which has a network of 24 retail stores in Greece, is also present in Albania, Bulgaria, FYROM and Romania. Germanos shares trade at 20 times estimated 2006 earnings, a hefty discount to the multiple of 30 for Europe’s largest independent phone retailer Carphone Warehouse, according to Reuters Estimates. Analysts say Cosmote’s higher distribution power if the deal is clinched may make parent OTE Telecom more attractive to European telecoms firms seeking acquisitions. The government plans to sell part of its 38.6 percent stake in OTE next year. «For OTE, it seems the move facilitates the sale of a stake to a strategic partner as the group now has a very strong and vertical presence in the markets where it operates,» said Proton Securities analyst Vassilis Kararizos. The Athens bourse suspended trade in shares of Cosmote and Germanos yesterday to Monday, when Cosmote will announce the outcome of the negotiations. OTE owns 67 percent of Cosmote. Separately, Germanos said it planned to sell its entire 24.67 percent holding in Hellenic Duty Free Shops (HDFS) to jewelry retailer Folli-Follie at 15.60 euros per share to focus on its core activities. Sources told Kathimerini that Cosmote, apart from Panos Germanos’s stake, has also agreed to buy out large blocks of shares from institutional investors and will make a public offering for the floating shares of retail investors with a view to acquiring a large majority stake and delisting the stock from the bourse. This would mean that the total buyout value may well exceed 1 billion euros. The group recently splintered its industrial battery division, Sunlight, which contributed 30 percent of the group’s turnover last year. This is now fully controlled by Panos Germanos and will not be part of any deal with Cosmote. (Reuters, Kathimerini)