(Bloomberg) -- Cyfrowy Polsat SA shares fell most since February after a report revealed infighting within the family of its billionaire founder over control of the Polish media, energy and telecoms group.
The stock dropped as much as 12% on Thursday — the most since its 2011. Cyfrowy has lost two-thirds of its market capitalization since a 2021 peak, valuing it at 8.16 billion zloty ($2.1 billion).
The selloff comes after newspaper Gazeta Wyborcza reported that Zygmunt Solorz’s children sent a letter to Cyfrowy’s managers, voicing concern over potential attempts to take over the firm. The children have difficulty in contacting Solorz due to his health, the daily said, and are in conflict with the billionaire’s current wife Justyna Kulka.
The billionaire responded Thursday in a letter, saying he plans to dismiss the children from his companies as their employment hasn’t led to improving their stability.
The spat adds to investor concerns over Cyfrowy, which was build from scratch by the 68-year-old Solorz, whose wealth amounts to $2.1 billion, according to the Bloomberg Billionaire index. The company’s shares have dropped in past years as the founder focused on bringing costly nuclear energy to Poland and was forced to cut dividends.
“Market concerns are justified,“ said Piotr Raciborski, an analyst at broker Wood & Co. “Investors may be afraid that any key business decisions may be frozen amid family conflict — even ahead of any succession.”
Investors want to see if Solorz “is still in good health to oversee his companies,” Raciborski added. Marcin Nowak, an analyst at Ipopema Securities SA, said a scenario in which the founder’s wife becomes the potential major successor, instead of his children, boosted the chances for major changes in group’s strategy, including potential divestments.
A trailblazer and rags-to-riches story, Solorz created the country’s first private television network as communism collapsed three decades ago. He bought a power plant and carried out the country’s biggest leveraged takeover to acquire a mobile operator from entities including Vodafone Group plc. His investment entity TiVi Foundation and his son Tobias Solorz jointly hold a 62.04% stake and 70.36% of the votes in Cyfrowy.
Tobias was the chief executive officer of Cyfrowy between 2015 and 2019, while his brother Piotr Zak was appointed as Polsat TV chief this year. Justyna Kulka — the billionaire’s third wife — joined Cyfrowy’s supervisory board in June.
Cyfrowy is carrying on “normally,” spokesman Tomasz Matwiejczuk said by a text message on Wednesday, adding that founder Solorz remains the head of the company’s supervisory board.
The company operates on the basis of its statute, which clearly describes the decision-making procedures,” he said. He declined to comment on Gazeta’s report of the letter sent by Solorz’s children.
Jozef Birka, a lawyer who’s worked with Solorz since the 1980s, told Bloomberg the spat is a “family matter” that he hopes will be resolved.
However in Thursday’s statement, Solorz said he’d take action aimed at ousting his children from his companies in the coming weeks.
“I have recently realized that involving my children in the management of companies at this stage contributes neither to a greater stability in the companies nor to building their better future,” he said in the statement.
(Updates with Solorz statement starting in third paragraph.)
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