O2 Czech Republic AS retreated from the highest level in seven years after MSCI Inc. didn’t include the phone company in its benchmark indexes.
The stock dropped as much as 11 percent on Friday before paring the decline to 3 percent at 158 koruna as of 2:33 p.m. in Prague, valuing the company at 50 billion koruna ($2 billion). O2’s share price is still more than double what it was before the company spun off its infrastructure assets on June 1 to boost profits.
MSCI removed O2 Czech from its Global Standard Indexes in May saying the spinoff would cut the market capitalization to levels precluding further membership. As the share price of the downsized company jumped 73 percent in June and another 47 percent in July, some investors predicted MSCI would return the stock in its review published late yesterday, according to Milan Vanicek, an analyst at J&T Banka AS in Prague.
“Today’s decrease is due to the market’s disappointment with the non-inclusion of O2 Czech in MSCI indexes,” he said.
Czech billionaire Petr Kellner’s investment company PPF Group NV said yesterday it owns 84.91 percent of O2 Czech and doesn’t plan to increase its stake to 90 percent, which would allow it to squeeze out minority shareholders. That’s about the same level as before PPF started a voluntary buyout at 78 koruna per share that ended a month ago.
“The offer price was almost all the time below the market price,” said J&T’s Vanicek.