Poland impose conditions for the privatization of its stock

Jan Tsienski
James Wilson

Polish government require additional guarantees from Deutsche Börse, which submitted the sole bid in a binding procedure for the privatization of the majority of the Warsaw Stock Exchange (WSE).
Poland sets conditions for future deals to ensure that its new partner will not divert trade with the best quotes of WSE, and will continue to develop its domestic market as the largest stock markets among the new states of the European Union Central and Eastern Europe.
„I gave a set of requirements for the privatization of the exchange. If the client can not fulfill them, the procedure will not move, do not seek to privatization at any cost, „said Polish Finance Minister, Alexander City, in an interview.
His spokesman confirmed that the candidate to Germany was sent a list of questions. It is believed that Questions were mainly related to the concerns of the ministry that WSE will retain their autonomy and will remain the leading factor in decisions on the shares traded in Warsaw.
Ministry seeks to obtain assurances that Deutsche Börse will maintain their investment for ten years, and promised an initial public offering of stock will be held in the capital Warsaw.
Transaction value is not so crucial for the Polish government, but according to one source there are divergences on the issue of price.
„One side wants a higher price, but the defendant has pledged a completely different amount,“ said our source who is well familiar with the negotiations between Poland’s and Germany’s cabinet. WSE analysts valued at over 1 billion Polish zlotys ($ 366 million). Last year, the exchange realized 81 million zlotys, while its president Ludvika Sobolewski expects even better results this year.
WSE has a significant symbolic role in the history of Polish capitalism.
It is one of the first market institutions that were founded after the fall of the communist regime in 1989, and in 1991 organized their trade in the building in which it has previously housed the Central Committee of the Communist Party.
The state, however, the status of WSE was an insurmountable obstacle to its efforts to buy other central exchanges. Its complex status cleared land for expansion to the Vienna Stock Exchange (VSE), which is also its largest regional competitor.
Sobolewski subsequently tried under this with pretty good success, to attract central listing of companies on WSE.
The Polish government decided that attracting a partner is the only way to further expansion of the institution (it has recently shifted its position from VSE to most Central European Exchange).
„Our goal is the Polish market to become central to the region. For this task we will need the appropriate investor who shares our ambitions and seek to promote the position of the WSE „, explains the City.
Four international exchanges were invited to tender for the WSE – Deutsche Börse, Nasdaq OMX, NYSE Euronext and the London Stock Exchange (LSE).
London withdrew before the end of the procedure, a final single company from Frankfurt submit a binding offer.
Deutsche Börse for the purchase of the Warsaw Stock Exchange has additional opportunities for synergies in terms of general infrastructure for trade and technology.
However, many problems complicating potential sales. One of them is the fact that the two exchanges use different trading platforms. Working with Deutsche Börse Xetra, which is preferred in Vienna, Warsaw while relying on Warset, similar to those used commercial systems in Paris, Brussels and Amsterdam.