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Dnevnik: Croatia's Agrokor Planing Hostile Takeover of Mercator

Ljubljana, 18 February (STA) - Daily Dnevnik reports on Friday that Croatian retailer Agrokor, backed by the EBRD, is secretly preparing for a hostile takeover of Slovenia's leading grocer Mercator. The first step allegedly planned by Agrokor is a bid for the 23.3% stake in Mercator that has been made available by beverage group Pivovarna Lasko.

According to Dnevnik, Agrokor's owner Ivica Todoric plans to wrap up the deal with Lasko in mid-April and publish a takeover bid for Mercator on 30 April with the aim of securing at least a 50% stake.

The project is said be financed by the Unicredit bank and its Croatian subsidiary Zagrebacka banka, with JP Morgan acting as financial adviser.

Agrokor is allegedly also in talks on co-funding with the European Bank for Reconstruction and Development (EBRD), which holds a 8.3% stake in the Croatian grocer and also helped finance the recent takeover of Slovenian food company Droga Kolinska by Croatia's Atlantic Grupa.

The acquisition of Mercator is to be financed with a new EUR 0.5bn loan, while the rest is to be secured directly by Todoric and the EBRD. The latter is said to be ready to invest between EUR 50m and EUR 100m.

Mercator closed at EUR 160 on the Ljubljana Stock Exchange on Thursday, which puts market capitalisation at EUR 600m. A takeover price of EUR 200 per share would translate into a EUR 750m deal.

The debt-ridden Agrokor already tried to get hold of a stake in Mercator twice in recent years, first in 2009 when it tried to buy a stake made available by the then CEO Lasko Srot.

The Croatian company also made headlines at the start of the 2010 when a consortium of banks, which had confiscated more than a third of Mercator's shares put up as collateral, was looking for prospective buyers.

Dnevnik reports that Agrokor's interest in Mercator is driven by expectations of strong synergy effects, which would enable it to repay the debt stemming from the takeover relatively fast.

Agrokor's plans include a cutting of Mercator's workforce on the markets where it is present by 5% to 10% in the coming three years, which means that 2,000 people would lose their jobs.

It also sees huge potential in Mercator's real estate, the sale of which would not only cover the takeover debt but also Agrokor's present liabilities.

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