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UL: Unraveling the ‘mystery’

18/08/2004 07:59
The picture about the prospective deal for the acquisition of Universal Life by a foreign company is becoming clearer. Few days after the enigmatic announcements of the Bank of Cyprus and the Popular Bank on the “expression of interest” for the acquisition of their stakes in the insurance company, the mystery is being unraveled.

The issue of the mysterious acquirer, the most important, is now clear: Eureko Communication Manager, Lorrie Morgan, confirmed our publication that the Dutch company is the likely buyer: “We have indeed expressed interest”, Ms. Morgan said yesterday but avoided to comment on rumours that Eureko has already signed a preliminary agreement with the banks.

As far as “Universal Bank” is concerned, Ms. Morgan confirmed StockWatch’s publication released on Friday: “The agreement under discussion includes the insurance activities of Universal and not the banking”. If the two parties reach an agreement, the banks will possibly withdraw from the Bank, in line with the recommendations of the Central Bank. This, however, is not certain, since there are many scenarios on the table. One of them supports that the banks will continue to have a small stake in USB, along with Universal Life and the Georgiou family. A Universal Life representative avoided to confirm or deny this scenario.

What it is also unknown is the sum that will be paid by the buyers and the benefits for the shareholders of the two banks. The Popular Bank estimates that its 35% stake is worth £9.3 million, that is £2 per share of the insurance company. The Bank of Cyprus said that its stake of 21.8% cost £7.9 million. “Obviously, we wouldn’t sell our stakes with an accounting loss”, a reliable bank source told StockWatch on Tuesday, avoiding to comment on the total sum of the deal or the possible benefits of the banks. It is noted that we are still not aware of whether the amount of £30 million concerns the banks’ stake (not likely) or the 100% of the shares (13.2 million) of Universal Life.

It is also unknown whether Eureko is interested in buying Mr. Georgiou’s stake. Bank officials and Universal Life representatives refused to make any comment on the issue. Mr. Georgiou was unavailable for comment.