Greek Government, Bidder Negotiate OPAP Price

Greek privatization agency HRADF announced yesterday a May 1st deadline for the only remaining bidder to submit an improved offer for the 33% share of OPAP, a monopoly under Greek gambling laws.

This is yet another troublesome development accompanying Greece’s efforts to raise funds through a systematic privatization of national assets. The sale of a third of OPAP was meant to be a pilot program for future deals, but it has not generated much interest among potential buyers.

In the end, only two companies made it to the finish line, but one of them, US hedge fund Third Point, was subsequently disqualified for its insistence on the right to resell the shares. Looking for a less speculative, longer-term investor, HRADF was left to negotiate with the only remaining bidder, Emma Delta.

This particular investment group, however, offered only 622 million Euros for the package, which the agency deemed insufficient. Based on stock market performance, the shares on sale are worth around EUR 725 million. At the same time, DB and NBG, the country’s advisors in this transaction suggested it may be worth only 610 million.

The differences in valuation stem in part from the uncertainty about OPAP’s future performance prospects. Heavy revenue taxes by the government will eat into profits this year, while international competitors are also calling for an end to monopoly, wishing to offer local customers competing alternatives to bet on sports in Greece.

The outlook for an internet expansion is also not clear. While the government would retain OPAP’s monopoly in the world of domestic online gambling, there is a distinct possibility that EU pressure may result in competitors also being granted Greek internet casino licenses.

Despite these uncertainties, the sale is likely to go through. Considering that a EUR 28 million raise is a mere 4.5% more than the original offer, and the fact that the deadline was determined in agreement with the bidder suggests that a deal will indeed be sealed.

This outcome also made more likely by the fact the Greek government is under pressure from the IMF and the EU to speed up privatization as one of the agreed conditions of the bailout.