Netia Battle Heats Up as Mennica Increases Stake to 12.9%

Mennica Polska SA raised its stake in Netia SA, Poland’s second-largest fixed-line phone company, to 12.9 percent, becoming its biggest shareholder and fueling speculation about a takeover by a strategic investor.

Mennica, which generates most of its revenue from making coins and magnetic cards, bought 2.3 percent of Netia for 44.2 million zloty ($14.6 million), or 5.49 zloty a share on the Warsaw bourse, it said in a regulatory filing late yesterday. Last week cable TV operator Vectra SA announced a bid for 33 percent of Netia at 5.31 zloty a share while investment fund MCI Management SA said on May 21 its stake rose to 7.1 percent.

“One can’t exclude there is some big strategic investor standing behind the shareholders,” Dominik Niszcz, a Warsaw-based analyst at Raiffeisen Centrobank AG, said by phone today. “The fact that in the last transaction Mennica bought shares above the Vectra offered price shows that the fight intensifies.”

Central Europe’s telecommunications market has been active for takeover deals in past years as rising competition and slowing growth prompted operators to review expansion plans. Telefonica SA (TEF) sold its majority stake in the Czech Republic’s biggest phone company for $3.4 billion in November. Deutsche Telekom AG this year bought out minority shareholders of its Czech unit for $1.1 billion and purchased GTS Central Europe for 546 million euros ($744 million) to expand fixed networks.

In 2011, billionaire Zygmunt Solorz-Zak took over Polish mobile-phone company Polkomtel for 18.1 billion zloty and later merged it with his media group Cyfrowy Polsat SA.

‘Nearing’ Target

Mennica is “nearing” its target stake in Netia and has no plans to sell its shares, Mennica Chief Executive Officer Grzegorz Zambrzycki said by phone today. The company is undervalued compared with its peers and its price will increase in the next three to five years after restructuring, he said.

The coin maker, controlled by Polish investor Zbigniew Jakubas, announced its first purchase of Netia shares in April.

Netia gained 0.4 percent to 5.48 zloty at 11:48 a.m. in Warsaw, climbing for a fifth day and valuing the stock at 1.91 billion zloty. Netia’s value is 2.7 times higher than Mennica’s.

Vectra, whose 610 million-zloty public bid for Netia ends on Aug. 5, treats the purchase as a “purely financial investment,” CEO Tomasz Zuranski said on July 2.

In May, Netia shareholders approved a plan for the company to pay its first dividend in eight years. The company plans to announce a new medium-term strategy “this autumn,” CEO Adam Sawicki said in May.

To contact the reporters on this story: Marta Waldoch in Warsaw at mwaldoch@bloomberg.net; Konrad Krasuski in Warsaw at kkrasuski@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Pawel Kozlowski, James M. Gomez

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