US private equity firm Lone Star has walked away from making a takeover offer for Bank of Cyprus, after being rejected with three approaches earlier this year.
Bank of Cyprus said in August the latest cash offer from Lone Star of €674m fundamentally undervalued the bank and its prospects.
Lone Star had been given until September 30 to submit a formal offer, but said on Tuesday it would not be doing so. It will now not be permitted to make an offer for six months under Irish takeover rules. Dallas-based Lone Star invests in real estate, equity and credit, and already has majority stakes in Germany's IKB and Portugal's Novo Banco, after investing in both after state rescues.
Bank of Cyprus said all the approaches from Lone Star had been “unsolicited, conditional, non-binding proposals". The third approach was received on July 8 and had been for €1.51 per share in cash, and was rejected on July 22. Bank of Cyprus said it had not received any further approach.
Bank of Cyprus shares fell 8.6% on Tuesday to €1.27, although they are still up 20% this year.
"The board remains confident in the company's future prospects and remains committed to delivering its strategy of becoming a sustainably profitable institution capable of further supporting the Cypriot economy," the bank said in a statement.
It upgraded its medium-term strategic targets in August and is aiming for a return on tangible equity of greater than 10% in 2023 and restarting dividends from 2023.
Bank of Cyprus is the leading bank in Cyprus but was hit hard by the eurozone debt crisis and needed state help, and has been restructuring since 2013 and selling off portfolios of unwanted loans.
Goldman Sachs and HSBC were joint financial advisers to Bank of Cyprus.