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Serbia’s MK Group May Cancel Bid for Hellenic Sugar, Kostic Says

MK Group d.o.o., a Serbian diversified holding company that focuses on agribusiness, may fall out of the race to acquire Greek sugar refiner Hellenic Sugar Co., over lack of clearance from a Serbian regulator.

MK Group, which submitted a non-binding offer for 82.33 percent of Hellenic Sugar last year, has sought approval from Serbia’s Commission for Protection of Competition for the possible purchase as Hellenic Sugar has two sugar refineries in Serbia. Together with MK Group’s four plants, it would push MK Group’s market share to 78 percent from 50 percent in Serbia, MK Group’s owner, Miodrag Kostic, said.

“The tender in Greece may expire before we receive approval from the commission and we are reluctant to proceed in the very costly process without assurances” from the regulator that it won’t find MK Group in violation of anti-monopoly rules, Kostic said in an interview in Belgrade today.

The tender, launched as Hellenic Sugar’s owner, Agricultural Bank of Greece SA, decided to sell non-banking activities, initially drew 11 potential buyers and the race has boiled down to the Serbian holding and Suedzucker AG, Kostic said in the interview at an economic forum.

MK Group, whose activities include sugar refining, trade, tourism, information technology and property management, has until mid-March to make a binding bid for Hellenic and might have to give up “over administrative problems in Serbia,” Kostic said.

IPO Plans

MK Group plans to offer shares in London and Warsaw and may have to wait until next year because “2012 seems to be catastrophic” for an initial public offering, Kostic said.

“We haven’t given up, we’ve prepared legal and financial due diligence, management presentation,” he said. “We’re just waiting for better times,” for the planned primary listing in London and secondary in Warsaw.

MK Group’s sugar production is 250,000 tons a year, already 50,000 tons more than Serbia’s annual consumption, while it exports 40 percent of the output, Kostic said.

“We export to many European Union countries, that’s our market, but I’m afraid the regulator takes into consideration only the size of the Serbian market” and may withhold the approval, Kostic said. “It’s absurd, but we could miss out on the chance to buy Hellenic.”

The company had said the acquisition would help its access to the sugar markets in neighboring Macedonia, Bulgaria and Albania, as well as Greece, a net importer of the commodity.

Serbia exports around 100,000 tons of sugar to Greece worth between 70 million euros and 80 million euros a year, accounting for 65 percent of an annual sugar export quota the country has with the EU.

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