Mercator Withdraws Support for Sale to Croatia’s Agrokor

Mercator Poslovni Sistem d.d. (MELR), the biggest supermarket chain in the Balkans, said it can’t support the sale to Croatian rival Agrokor d.d. after a new dispute arose over who is involved in the sale talks.

The Ljubljana-based company said on Oct. 28 that the European Bank for Reconstruction and Development and the International Finance Corp. are part of Agrokor’s talks with Mercator’s owners. Today, Mercator said the two institutions are “not in partnership” with Agrokor.

“So it’s impossible to reach an accord to protect the interests of Mercator,” the company’s managers said today in a statement to the city exchange.

Slovenian investors, including the lender Nova Ljubljanska Banka d.d. are in exclusive talks with Zagreb-based Agrokor and its partners for the sale of a 52 percent stake in Mercator. The Croatian rival offered 221 euros ($296) for the holding and would have to extend the offer for the rest of Mercator shares if its bid is successful.

Agrokor declined to comment on the “attitude of the management board” because it is an “issue between them and their owners,” according to an e-mailed statement. It also said it would continue talks with the owners and “with the process, in accordance with the rules.”

Mercator spokeswoman Tanja Durin confirmed managers cannot stop the sale but have the right to withdraw support for the process.

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Agrokor, helped by a fund owned by JPMorgan Chase & Co. in its Mercator bid, wants to extend its reach in the Balkans after Belgium’s Delhaize Group SA purchased the Delta Maxi chain in Serbia this year. Mercator had sought agreements with both the Slovenian sellers and its suitor Agrokor before proceeding with the disputed sale.

“It’s true that Agrokor doesn’t have an agreement with EBRD or IFC to invest in Mercator, but in today’s business world investors sign such an accord after they carry out due diligence,” Radivoj Pregelj, an analyst at Abanka Vipa d.d. said over the phone today. “And this little detail is being used by Mercator in its own defense.”

Pregelj said a compromise may still be “down the road” because the investor banks and Pivovarna Lasko are “in a hurry to sell.”

Mercator will reconsider participating in the sale process “if at least one of the international institutions such as EBRD or IFC becomes a member of the consortium as it was announced earlier,” the Slovenian retailer said today.

The announcement came as the Ljubljana stock exchange closed for the day. Before that, Mercator continued to fall for a third consecutive session and dropped the most in three weeks. Shares were down 4 euros, or 2.2 percent, to close at 176 euros in Ljubljana, giving the company a market value of 662.7 million euros.

To contact the reporter on this story: Boris Cerni in Ljubljana at bcerni@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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