The message shows that Term Sheet is a key step because it transforms preliminary intentions into a specific action plan, organizes project management structures, defines the schedule and stages of work, and also sets the grounds for key elements of financial transaction and identifies the necessary external conditions for its implementation.
As stated in the announcement, the parties intend to establish a control committee and joint working groups to coordinate works that will include the division of PZU and a subsequent connection to the Pekao bank. The need to determine the parity of the exchange of shares and the involvement of independent entities for valuation was also indicated.
It has been added that the signing of Term Sheet is another step in preparing a potential reorganization of the capital group and creating a new banking and insurance group. The goal is to reorganize and increase the efficiency of the capital group by releasing a capital surplus of up to PLN 20 billion.
Key document signed. PZU and Pekao set up the principles of cooperation
The document sets out the principles of cooperation between both parties in the pursuit of the planned transaction, as well as tasks to be carried out and individual stages of work.
The parties will be appointed by the Control Committee, which will include PZU and PEKAO CEOs and one board member from each company. This committee will gather regularly, make decisions unanimously and determine the schedule and milestone of the project. Common working groups and own groups for individual areas of activities will be created. In addition, the parties will employ an external project manager together
Term Sheet also indicated that PZU has already taken and will conduct activities aimed at conducting the division and creating a holding structure. Term Sheet also confirms the intentions of the parties to implement a potential transaction until June 30, 2026.
As stated, the parties will specify the rules for determining the parity of the exchange of PZU shares for the shares of Bank Pekao, which would be issued to PZU shareholders in the merger process. The parity is to be determined taking into account the interests of all shareholders, including minority. The valuations of PZU and Bank Pekao will be made by reputable entities selected by the insurer and the bank, respectively.
The announcement also indicates that the transaction depends on a number of factors independent of the parties, including: entering into force of relevant legislative changes (amendment to four laws), agreements and concluding relevant transaction documentation, obtaining the consents of the Council of Ministers and a series of regulatory consents, in particular the PFSA.
It was recalled that, according to the collaboration on June 2, PZU and Pekao, they want to reorganize and increase the efficiency of the capital group by releasing a capital surplus of up to PLN 20 billion.
In the first stage leading to a potential transaction, the division of PZU SA is planned by separating the holding company and in 100 percent. A company that has been dependent on her operating activities in the field of property and other personal insurance. In the second stage, the PZU holding company will be connected to the Pekao bank as a acquiring entity.
Connection of PZU and Pekao. Strong foundations
The Capital Group of the Universal Insurance Company is the largest financial institution in Poland and Central and Eastern Europe.
The group is headed by PZU – the company has been listed at the WSE in Warsaw since 2010. The group includes, among others: PZU Życie SA, Link4 TU SA, TUW PZUW, Alior Bank SA, Bank Pekao SA. The group manages about PLN 300 billion of assets and provides services to approx. 22 million clients in five countries. The State Treasury in PZU has about 34.2 percent action.
Bank Pekao, founded in 1929, is one of the largest financial institutions in the region of Central and Eastern Europe and the other largest universal bank in Poland with PLN 334 billion; has a second largest network of branches in the country. The bank is listed on the Warsaw Stock Exchange. 20 percent Pekao shares are controlled by PZU and 12.8 percent has pfr.
