Agrokor Eyes Mercator as Croatia Nears EU, Analysts Say

Agrokor d.d., Croatia’s largest company, may revive plans to buy Mercator Poslovni Sistem d.d. to expand in two European Union countries and the rest of the Balkans, Abanka Vipa d.d. and Alta Invest d.d. analysts said.

Zagreb-based Agrokor, which owns Croatian retailer Konzum d.d. and ice-cream maker Ledo d.d., abandoned its bid in February after delays and opposition from Slovenian officials. Two banks involved in the process, UniCredit SpA and Raiffeisen Bank International AG, withdrew their support for the takeover, Finance newspaper said yesterday without saying where it got the information.

Agrokor may still look to Mercator to expand its Balkan business as the retail industry consolidates following the takeover by Delhaize Group SA of Serbia’s Delta Maxi last year, analysts said. Croatia is set to join the EU in 2013, giving the 27-nation bloc deeper reach in the Balkan region after Slovenia’s entry in 2004.

“I believe Agrokor is still very interested in Mercator, especially now that Croatia’s EU membership is approaching as it would have a dominant position at home, in Slovenia and a big market chunk in Serbia,” Radivoj Pregelj, an Abanka Vipa analyst, said in a phone interview in Ljubljana. “Some banks may have pulled out because Agrokor earnings are worsening, but I believe it’s still in the game.”

Agrokor offered 221 euros per Mercator share when it made a non-binding bid last year, valuing the retailer at 832 million euros ($1.1 billion).

Banking Concerns

A majority of Mercator was offered for sale by Slovenian investors, including banks Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d. at a time when concern rose that Slovenia may be forced to ask for international assistance to prop up its financial industry.

Mercator, the largest retailer in the Balkans, dropped 0.9 percent to 111.50 euros at 12:45 p.m. in Ljubljana, valuing the company at 420 million euros. Agrokor isn’t listed on any stock exchange.

The Slovenian company reported a 16.5 million-euro loss in the first half of the year as the recession and government austerity measures pushed up the jobless rate and eroded consumer spending.

“Agrokor is still eying Mercator, mainly to cement its dominant position on the Croatian market,” Saso Stanovnik, head of research at Ljubljana-based Alta Invest, said in an e-mail. “That’s why it was so persistent in the past, but now it seems difficult the sale would go through at a much lower price.”

Agrokor’s revenue fell 0.5 percent to 7.46 billion kuna ($1.28 billion) in the second quarter from the previous three months. Net debt rose 9.6 percent to 10.71 billion kuna from a year earlier, according to a report by Jyske Bank in Denmark.

Agrokor declined to comment on efforts to renew the bid. Zagrebacka Banka d.d., the Croatian unit of UniCredit, and Raiffeisen in Vienna also declined to comment.

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