Hungary’s largest BSE-listed investment holding firm is born

Hungary’s largest BSE-listed investment holding firm is born
Lorinc Meszaros watching football with PM Viktor Orban
By Levente Szilagyi in Budapest December 5, 2018

Shareholders of listed holding companies Opus and Konzum approved a proposal to merge Konzum into Opus at the two companies' shareholders' meetings on Monday, the two companies said on the Budapest Stock Exchange website on December 4.

The merged company is expected to become the fifth largest on the Budapest Stock Exchange with a market capitalisation of around €1.2bn

Opus and Konzum announced their merger plans in October. The transaction is expected to be closed by the end of March 2019. All assets of Konzum will be transferred to Opus, which will act as legal successor and continue to operate as a public company. Both companies are controlled by Lorinc Meszaros, the Hungarian oligarch regularly named as a proxy for the Prime Minister Viktor Orban.

The merger would be the first between two firms on the Budapest Stock Exchange, leading to the largest investment holding in the county, 

In 2017, Meszaros gained stakes in the two-BSE listed small caps. The two shares staged unprecedented rallies that year, rising a whopping 1,500% and 6,000% respectively, fuelled by speculation of further acquisitions. 

Konzum and Opus now have a complex structure and in the future it will focus on energy and industry, the financial sector, the IT and telecom sectors. The owners want to exploit critical scale and enter international markets. The management hopes that the merger will also open doors to new financing opportunities.

Last week the management announced the launch of a five-stop roadshow to inform investors about their operations and strategy. Investors will be briefed in the outlooks of the two after the merger in Frankfurt, Stockholm, London, Helsinki and Tallinn.

“We have serious growth plans in the region in the three strategic sectors, and a company with a market capitalisation of €1bn has much wider room for manoeuvre,” CEO of Konzum Gellert Jaszai said at an investors conference in October.

The merged company's annual revenue is expected to exceed HUF200bn (€621mn) in 2019, more than double Konzum's and Opus's combined turnover of last year. The companies’ management estimates the merged companies' market capitalisation will reach HUF350bn-400bn, while its net assets will exceed HUF320bn. The merged company's Ebitda is targeted at HUF30bn. A presentation posted along with the disclosures shows the merged company plans to start paying a dividend on 2019 earnings.