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Analysis & opinionFebruary 2 2005

KBC reverse takeover will keep it simple

Belgium’s KBC will buy its shareholder Almanij in an operation that will almost double its free float and simplify its current structure. The new KBC Group NV will increase the number of shares in the Euronext stock market and will have a simpler holding and operational structure.
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Currently core shareholders own the operational companies through three different layers of holding companies, which means that Almanij shareholders own the KBC Bank via the holding of KBC. To eliminate one of the layers, KBC will buy its holding company Almanij.

Almanij and KBC are both quoted on the stock exchange at present. In the reverse takeover, Almanij shares will disappear and there will be a single listing: KBC Group NV. After the merger, owners of Almanij stocks will be able to exchange their shares to a ratio of 1.35, which will increase the free float of the complete group on the stock exchange from 30% to 47%.

Core shareholders of the Almanij group who previously owned 70% of Almanij will now own around 50% of the new group, and their shares in turn will have a higher value. Although the Belgian Farmers Union Group Holding (MRBB) was already part of the core shareholders, it will join Cera, Almancora, and other shareholders in committing its shares to KBC.

Although analysts and KBC itself praise the fact that the free float increase will enhance liquidity, core shareholders argue that the main reason behind this operation is to simplify the ownership and the management of KBC.

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