Agrokor’s offer for Mercator is unserious and lacks bank guarantees

Binding offers for the purchase of 53 percent of Mercator’s shares were submitted only by the Agrokor group and the financial fund MID Europa Partners, Slovenian media reported on Monday, citing unofficial information.

The deadline for submitting binding offers expired on Friday, and no offers were made by the funds CVC Capital and Bain Capital, which participated in the previous process of submitting non-binding offers and reviewing the operations of the largest Slovenian retail chain, according to Delo, Dnevnik, and the business newspaper Finance. There is no official information, and the supervisory board of the largest Slovenian retail chain will be acquainted with the submitted offers, which are below the owners’ expectations, on Tuesday, the media in Slovenia report.

According to unofficial information reported by Delo, Agrokor based its offer on the market quotation of Mercator’s shares on the Ljubljana Stock Exchange, which amounts to around 110 euros, while MID Europa Partners opted for a different approach, not stating a price but only offering the recapitalization of Mercator.

The offer from the financial fund is more suitable for Mercator, while Agrokor’s offer is aimed at the owners of the retail chain, among whom the largest is Pivovarna Laško (PL), alongside Nova Ljubljanska Bank (NLB), which needs to reduce its debt, owing 360 million euros to creditors – Slovenian banks, Delo states. The leading Slovenian newspaper adds that the owners of 53 percent of the offered shares of Mercator will have to decide whether the two offers are attractive enough to continue negotiations with one or both potential buyers, and that a quick decision on this is also expected by Mercator’s management and its supervisory board, which meets on Tuesday.

Ljubljana’s Dnevnik states that the submitted offers are below expectations, and that Agrokor’s offer is humiliating, unserious, and has an unclear financial structure as it was submitted without bank guarantees, along with a non-binding letter of support from the funds Blackstone and One Equity Partners.

Both Agrokor’s offer and MID Europa’s offer, according to unofficial information cited by this newspaper, “significantly deviate” from the expectations of the consortium of owners of 53 percent of Mercator’s shares (more banks and Pivovarna Laško).

Therefore, “it cannot be ruled out that they will stop the sales process,” states Ljubljana’s Dnevnik. The same newspaper notes that Slovenian Prime Minister Alenka Bratušek, in a recent interview with a Croatian daily regarding a possible merger of Agrokor and Mercator, said that this would mean “instead of two companies facing difficulties, we would have one with even greater problems,” and reminds that the previous eight attempts to sell Mercator have been unsuccessful and that the doctrine of the so-called national interest, which dictated part of the policy for which Mercator is crucial for Slovenian suppliers, the food industry, and strengthening exports to regional markets, has also influenced the sales process.

The business newspaper Finance also states that the ninth attempt to sell Mercator could be halted. The consortium of Mercator’s owners will announce this week whether they will decide to continue the sales process or not, but observers doubt that the price of around 110 euros per share is attractive enough, so the sale could be interrupted, Finance reports.