antibacterial drug (trade name Nydrazid) used to treat tuberculosis
- Purchase of INH shares held by TŽ
- The purchase of the INH shares held by TŽ does not constitute State aid.
- Third, in addition to the last consideration, the Czech authorities indicate that, before eventually granting its approval in March 2004, the CSC had already rejected one submission by INH and one by LNM (the majority shareholder of INH).
- In its submission to the CSC, INH underpinned the proposed price by the valuation report of an expert.
- The Commission observes that the forecasts made by the expert selected by INH were indeed conservative (see below);
- INH then made a new submission on the basis of a valuation report respecting all the regulatory requirements.
- the Commission accepts that, regarding the expert report, the market economy investor and the seller know that the expert is selected and paid by INH.
- the Czech Government acquires from TŽ, through the Czech Consolidation Agency (CCA), the 10,54 % stake held by TŽ in the steel company ISPAT Nová Huť (INH).
- Indeed, in March 2004 the Czech Securities Commission (CSC) authorised INH to buy back its own shares on the stock market at a price of CZK 550.
- KPMG therefore acknowledges, like the expert hired by INH, the favourable situation on the steel market in 2003 and its cyclical nature.
- Finally, the Czech authorities point out that the public offer by INH to buy back its shares at a price of CZK 550 met with very little response.
- In the opening decision, the Commission acknowledges that, while the stock market price normally constitutes the best indicator of the value of shares, the price observable on the Prague Stock Exchange for INH shares does not constitute a reliable indicator of the value of a 10 % stake in INH capital.
- The Commission accepts the third element put forward by the Czech authorities, namely that a market economy investor would have interpreted the prior double rejection by the CSC as confirming its expectation that INH and LNM (the majority shareholder of INH, which is the driving force behind this operation since it will buy from INH the shares that the company has bought back) were trying to undervalue the company in order to pay the lowest possible price for the shares they wished to buy back.
- on the basis of the information submitted by the Czech authorities, the Commission observes that the CSC did not produce its own expert report on the value of the shares, which would replace the expert valuation report presented by INH.
- The Commission would observe that the expert hired by INH indeed considers that the net profit achieved in 2003 is very exceptional and anticipates that profits will decrease by two thirds over the coming years.