Croatian retailer Agrokor has agreed a deal which will see it acquiring a majority stake in Slovenian rival Mercator for €240 million. Zagreb-based Agrokor, which has stores across the Balkans, struck a deal to buy a 53.1% stake in Mercator from a consortium of 12 shareholders, with each share costing €120. According to Agrokor, this represents €452 million (US$587 million) for a 100% stake. Shareholders have been looking to offload stakes in the retailer since 2008.
According to Agrokor, 'The partnership of Agrokor and Mercator will create one of the largest retail companies in Central and Eastern Europe, with top market positions across the Adria region. The combined company will achieve around €7 billion of annual revenues and employ over 60,000 people'.
'Through the combination of operations, both companies will benefit from increased scale and synergies, resulting in increased profitability and cash flow generation'.
Commenting on the acquisition, Ivica Todorić, Agrokor president, said, "This combination represents a compelling business opportunity to create a retail champion with the potential to increase overall competitiveness, preserve employment and to spearhead future economic growth and preserve employment not only for Slovenia and Croatia but for the wider region and gain relevance on European scale."
He continued, "The combined company will offer our customers greater value through an expanded assortment of goods, the best prices and a higher quality of service. In addition, the strong strategic fit of our operations will allow the joint company to realize significant value and benefits for all stakeholders resulting in a stronger financial position and the potential for further regional expansion.”
Chairman of the management board at Mercator Group, Toni Balažič, commented that the Mercator management board "will carry on its efforts to see that the sales process meets three key conditions: that the acquisition is financed with international financial capital rather than with debt; that the process of sale is supported by the creditor banks; and that the acquirer supports Mercator's further development."
"Everyone at Mercator is aware of the importance of this moment, both for Mercator and for all stakeholders involved. We shall therefore keep up our focus on our operations and our consumers as we strive to remain their best neighbour," Balažič said.
Completion of the transaction is subject to regulatory approvals, the successful refinancing of Mercator’s outstanding debt and other customary conditions. The transaction is expected to be completed around the end of 2013. Following the closing of the transaction, Agrokor will be obliged to publish a mandatory tender offer for the remaining shares of Mercator.
