Overview of the latest economic events in the Czech Republic

The Prague Stock Exchange ended trading mixed. The PX index returned to a slight decline in the afternoon after a morning growth and closed near the 1530-point mark. The biggest losses were recorded by shares ČEZ, which weakened by more than 1 %, while financial titles such as Komerční banka a Moneta Money Bank have shown a stable performance. Shares Philip Morris ČR rose, thanks to continued speculation about a possible dividend. Total volume traded was slightly below the long-term average.

Today's main domestic report focuses on fuel and a large transaction in domestic pharmaceutical manufacturing. According to the company's tracking CCS after five weeks of cheaper fuels, they became more expensive again last week - Natural 95 by 14 cents on average to CZK 33.77/l and diesel by 14 cents to CZK 32.39/l. However, year-on-year comparison shows that fuels are still cheaper than last year (petrol by ~2.37 CZK/l, diesel by ~2.03 CZK/l).

Foreign investment

Big news with an immediate impact on the Czech economy came from international markets: a US private-equity company GTCR has reached an agreement with the current owner Advent International to take over a Prague-based generics manufacturer Zentiva worth €4.1 billion. Converted at an exchange rate of around CZK 24.4 to the euro, this amounts to approximately CZK 100 billion. The transaction represents a significant injection of capital into the domestic pharmaceutical industry and is one of the largest exits of private equity funds with ties to the Czech Republic this year.

Uvedení GTCR jako kupujícího a Advent International as a seller is essential: GTCR would thereby expand its portfolio of healthcare assets, while Advent would realise a significant return on its investment in Zentivy. Official communiqués from both sides are awaited.

Significant events outside the Czech Republic with global impact

There have been several transactions and market shocks on the global scene that will have an indirect impact on Czech companies and investors: Oracle reported strong quarterly results that caused a sharp rise in its stock price and led the co-founder Larry Ellison krátce vystřídal Elona Muska as the richest man in the world. Ellison's fortune at that point was estimated at $393 billion vs Musk's ~$385 billion.

Italská společnost Bending Spoons announced the takeover of the platform Vimeo and plan to take the company private in a transaction valued at about $1.38 billion.

In the US, a petrol station operator announced RaceTrac an agreement to buy the chain Potbelly Corp for approximately $566 million. The transaction combines the retail and restaurant segments.

Bain Capital has agreed to sell its Chinese datacentre business to a domestic consortium for about USD 3.9 billion. This is an important signal to European investors about developments in cloud and infrastructure services.

Banking sector and regional spillovers

In the banking sector, developments in Italy should be monitored: Monte dei Paschi di Siena continues its efforts to acquire a controlling stake in Mediobanca. According to the comments of the management Mediobanca the proportion could reach up to ~80 %. Consolidation in European banking increases regulatory and competitive risks that may affect banks' relationships with corporate finance in the region.

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