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Agrokor to Buy Mercator in Largest Takeover in Balkans

June 26 (Bloomberg) -- Agrokor d.d., Croatia’s largest company, reached final agreement to buy a majority of Slovenian rival Mercator Poslovni Sistem, in a deal worth 1.3 billion euros ($1.8 billion), the largest takeover in the Balkans.

Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d., both state-owned, are among 12 Slovenian investors to sell 53 percent in an accord set to close tomorrow, Pivovarna Lasko d.d., the Ljubljana-based company’s largest investor, also state-run, said in a statement. The agreement’s enterprise value includes debts and a rescheduling that comprises a 200 million-euro ($273 million) subordinated loan from Agrokor, Mercator said separately.

The accord brings to an end Agrokor’s years-long struggle to create the largest retailer in central and eastern Europe, excluding Russia, with revenue of as much as 7 billion euros a year. It will also strengthen Slovenian banks, which received a 3.2 billion-euro state capital boost last year.

“Finally this deal is done and it’s a very positive signal not only in terms of the corporate deal, but the political aspect as well,” Gunter Deuber, the head of research at Raiffeisen Bank International AG in Vienna, said by phone today. “There has been political opposition in the past, so this should be encouraging to international investors looking to other privatization deals in Slovenia.”

Shares Rise

Mercator shares advanced the most in two months, rising 4.2 percent to close at 80.20 euros in Ljubljana after surging as much as 5.8 percent in earlier trading. The volume was at 392 percent of the three-month average, according to data compiled by Bloomberg. The stock has lost 27 percent of its value from a year ago and gives the company a market value of 302 million euros, data shows.

Agrokor said the transaction is expected to be closed in the “next few days,” according to an e-mailed response to Bloomberg questions.

Closely held Agrokor offered 221 euros per Mercator share in 2011, valuing the retailer at 832 million euros, before abandoning the bid in early 2012 amid opposition from Slovenian politicians and due to a protracted process. It won regulatory approval for the transaction in Slovenia, Croatia and Serbia. Slovenians have nothing to fear from the sale of Mercator to Agrokor, Nova Ljubljanska Chief Executive Officer Janko Medja said June 24 after Prime Minister Alenka Bratusek called a meeting to assess the risks to the economy.

Regional Consolidation

Medja said Slovenia and the wider Balkans region would benefit from a consolidation of the retail industry, while Bratusek said she was given assurances that no job cuts would follow the takeover.

Zoran Jankovic, former CEO of Mercator and leader of the Positive Slovenia party said today it’s a “sad” day for Mercator.

“It’s not decent that some people are playing with the fate of the employees and suppliers,” Jankovic said today in Ljubljana, according to Finance newspaper.

Mercator employed 22,603 at the end of last year and operates about 1,600 units in the Balkan states. The retailer narrowed its loss in the first quarter to 8.5 million euros from 8.6 million euros a year earlier. Revenue declined 5 percent to 625 million euros after Mercator withdrew from the Bulgarian market.

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

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net Elizabeth Konstantinova, Michael Winfrey

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