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Mercator Gains in Ljubljana as Banks Seen Adamant to Sell

Mercator Poslovni Sistem d.d. gained in Ljubljana amid expectations banks will sell their majority stake in the biggest store chain in the Balkans to its Croatian rival Agrokor d.d..

The stock rose 8 euros, or 5.2 percent, to close at 161 euros, the most in three weeks, after rising as much as 8 percent in earlier trading. Mercator advanced 4.8 percent this year, giving the company a market value of about 606 million euros ($792 million).

“Banks are apparently adamant to sell their holdings in Mercator,” Saso Stanovnik, head of research at Ljubljana-based brokerage Alta Invest d.d., said in an e-mail today. He doesn’t own Mercator stock. “At this price on one side and what Agrokor offered on the other, one would get a hefty profit, so it’s worth speculating.”

Slovenian banks, including Nova Ljubljanska Banka d.d. and other investors are in exclusive talks with Agrokor, Croatia’s biggest private company, to purchase the 52 percent stake of Mercator. Agrokor bid 221 euros per share and would have to extend its offer for the rest of Slovenian rival if its bid is successful.

Management Demands

The management of the Slovenian company is refusing to allow due diligence to its rival and is demanding more binding commitments from Agrokor’s partners, including the European Bank for Reconstruction and Development, to protect the interests of the retailer. Mercator management has said it can’t stop the sale.

Slovenia opposes the EBRD’s participation in a “possible hostile takeover” of Mercator by Agrokor, the Finance Ministry said in a statement in Ljubljana today. The ministry believes the takeover would have significant negative implications for Slovenia’s economy.

Slovenian banks need to raise fresh funds to improve their capital cushions by mid-2012 as bad loans continue to advance after the 2009 recession and a faltering economic recovery. Both NLB and Nova Kreditna Banka Maribor d.d. are likely to report full-year losses for 2011. Bad loan provisions at lenders in the country surged 40 percent in the first 10 months from a year ago to 706 million euros, according to the Slovenian central bank.

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