Business News

Fructal to be Sold to Serbia's Nectar (II)

Ljubljana, 26 July (STA) - Brewer Pivovarna Union, part of the debt-ridden beverage group Pivovarna Lasko, has signed a deal to sell its majority stake in fruit drinks producer Fructal to Nectar, the Serbian fruit drinks and jam producer.

Pivovarna Union will get EUR 35.3m for the 93.73% stake in Fructal under the agreement signed on Monday, which puts the total value of Fructal at EUR 50.2m, Lasko officials told reporters at Tuesday's press conference.

As Nectar will also take over the debt of the Ajdovscina-based fruit drinks maker, the deal will enable Lasko to reduce its debt by EUR 48m.

Lasko chairman Dusan Zorko described the price as "favourable", adding that while being important the price was not the only factor in deciding to sell Fructal to the Serbian company.

He said Nectar had committed to continue to develop production at both Fructal's plants in Slovenia, in Ajdovscina and Kamnik, to buy fruit locally, to cooperate with the local community and to open markets in the former Yugoslavia and Europe.

The deal still needs to be endorsed by the shareholders of Pivovarna Lasko, who are scheduled to meet on Saturday, while the supervisory board of Pivovarna Union gave its stamp of approval on Monday.

The sale is expected to be finalised by the end of November, after it has been approved by the anti-trust watchdogs in the countries concerned and when other conditions of the transaction have been met.

Nectar, which has about 50% market share in Serbia, will then need to publish a takeover bid for the remaining 6.27% stake in Fructal.

Nectar will secure EUR 7m for the acquisition from own funds, while part of the financing will be provided by the European Bank for Reconstruction and Development. It expects the investment to return in seven years.

Around 100 domestic and foreign prospective investors had been contacted in an international, two-stage procedure to sell Fructal, Lasko said, adding that ten non-binding and five binding bids were submitted.

According to daily Dnevnik, other serious candidates were the London-based private equity fund Argus, Austrian fruit drinks producer Spitz and Croatian Grupa Stanic, part of whose business is beer distribution.

But the paper says that only Nectar and Argus responded to the call to improve their bids.

An official statement from Lasko said that Nectar was chosen as the best bidder in terms of price and other conditions.

Financial counselling in the process had been supplied by the Austrian and Slovenian subsidiaries of the financial group Unicredit and legal counselling by Wolf Theiss.

The Fructal group employs around 500 workers. It generated annual revenues of EUR 56m in 2009.

Finance quoted unofficial data in reporting that the company's operating results in the first half of the year were an improvement on the same period last year when it made a loss of EUR 100,000 on EUR 27m in sales revenues.

In a first comment to the sale, Agriculture Minister Dejan Zidan said he found it important that the "new owner keeps production and development in Slovenia and to commit to cooperation with the local community".

Fructal juice is not known for its low price but for its high quality, based partly on the good quality of the local fruit, Zidan said, adding: "The length of the supply route is terribly important in fruit production."

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