Foreign takeover of local grocers sends shivers down Slovenians' spines

07-04-2006

Speculation about a possible takeover of retail chain Mercator by Serb investors has sent shivers down the spines of Slovenians. Mercator is Slovenia's largest grocery chain and one of the biggest companies in the country. The rumours leaked at the beginning of the month, and immediately investors and the media alike struggled to find out whether the news was an April Fool's Day joke or real.

On the last day of March, the daily newspaper Dnevnik broke the story that Mercator had been targeted for takeover by Serbian and Russian owned companies. The story, headlined "Threat of Serb-Russian Takeover Lingering over Mercator", speculated that the companies had offered 208 euros per share - roughly 20 percent higher than [Mercator's] two largest shareholders had paid just a year ago.

The first effect of the rumours was felt at the Ljubljana Stock Exchange. Mercator's shares rose 10 percent in the days after the story was published. Shortly afterward, those rumours seemed confirmed when London-based Altima Global Special Situations Master Fund announced its intention to acquire almost 25 percent of Mercator.

But with representatives remaining tight-lipped, the media was left guessing. RTV Slovenia's Uros Kokosar:

"The case of Mercator raises interesting questions. The first is: why exactly does the English company Allteam want to buy about a quarter of the shares of Slovenia's largest grocer? If it's a portfolio investment, then it makes sense, and they will stay with the investment until they make money with Mercator. But they also could sell it to anybody for any price."

Confusion spread. The business daily Finance said in its online edition that the heads of Istrabenz and Pivovarna Lasko, Mercator's biggest owners, had agreed to allow Altima to get a stake in Mercator. However, the owners of both companies denied the reports. Both companies insisted that their investment was part of their long-term strategies.

There was also dispute about what the sale would mean. Matej Tomazin, a stock market consultant, told the Slovenian wire service STA that the offer would "attract more investors and energize the Ljubljana Stock Exchange." Others insisted it would weaken Slovenia's economic position to give up prominent firms to foreign companies.

The Slovenian newspaper Delo lamented that Mercator was in the worst position of all: being acquired by a company that wasn't a strategic partner. The grocer was simply caught in the middle of a battle to control it.

Things also got interesting when it was revealed that the former head of Mercator, Zoran Jankovic, had connections with Altima and that he may have convinced them to make the bid. Slovenian papers also began wondering if Jankovic could lead smaller shareholders into a better position.

In the fight for one of Slovenia's largest companies, things will only be clear when the dust settles.

07-04-2006