Who is more active in the new acquisition wave? Which country is more successful in the economic clash in the long run? We tried to find answers to these questions by delving not only into mutual relations in M&A (mergers and acquisitions) but also into ownership, real estate, tourism, exports, stock market, and all other fronts where the two countries have economic relations, and we attempted to forecast the direction and intensity of the struggle on that front in the future. Looking solely at the amount of direct investments in the past year, it is evident that Slovenian companies were significantly more agile. In tennis terms, they won one set.
– In 2022, Slovenian investments in Croatia amounted to 225 million euros, while Croatian companies recorded negative investments, or withdrawal of funds, in Slovenia, amounting to 112 million euros – said Diana Kovač from the Croatian Chamber of Economy’s Center for International Business.
Without enthusiasm, please!
A year earlier, the advantage was on the side of Croatian companies: direct investments in Slovenia amounted to nearly 600 million euros compared to 451 million Slovenian investments. However, the Croatian success that year was likely due to the resolution of the saga surrounding the acquisition of Mercator, as around 70 percent of the shares of that company were transferred from Agrokor to the Fortenova Group that year.
– Among the more significant acquisitions of Croatian companies in Slovenia, the most well-known is probably the one in which Mercator was acquired by the current Fortenova Group, which was carried out in several phases, the last of which was in 2021, and which was covered by the media from various perspectives, both positive and negative. It is also worth mentioning the acquisitions of Tokić and CIAK companies in Slovenia, where it happened that distributors of auto parts from Croatia, despite the prevailing view that the Slovenian economy, rather than the Croatian one, is connected with auto parts, are actually expanding inorganically through acquisitions, while acquisitions in the opposite direction were expected, from the perspective of which industry is more natural to which country.
Conversely, we can primarily mention Petrol, whose last acquisition, in 2021, was the company Crodux derivati dva d.o.o., which is its largest completed transaction of that kind. With this acquisition, Petrol significantly strengthened its market position, not only in Croatia, where it became the second player in terms of market share, but also from the perspective of the wider Southeast European region, which creates potential for further growth and realization of significant synergies in neighboring countries where Petrol has been operational – noted Damir Kecko, partner and head of the Transaction Services Department at PwC Croatia and PwC Slovenia.
General Outrage in the Country
The crossings of Croatian capital across the border were not exactly welcomed with enthusiasm. Under the guise of protecting national interests, Slovenian politicians and the public were against Agrokor’s efforts to acquire the largest retail chain in Slovenia. Although not to the same extent, Slovenians were also not thrilled with Atlantic’s acquisition of Droga Kolinska, Dukat’s Ljubljanske mlekarne, and Podravka’s purchase of Žito, especially since during one period these acquisitions piled up, leading to fears in Slovenia that Croatians would dominate their food industry.
To the general outrage in the country, during that period it seemed that Croatian entrepreneurs had finally begun their march north. Until the great economic crisis of 2008, Slovenians were very agile in acquisitions in Croatia, and then, due to financial problems of local companies, the wheel of fortune, or investment activity, turned in the opposite direction.
– There is no longer a strong desire from politics to dictate or protect cross-border transactions, the barriers that existed have been dismantled, and all business entities know each other very well, so I believe that we will witness interesting transactions in the future. Recently, there has been increased activity in acquisitions along the Slovenia – Croatia line in various sectors, and every now and then a new potential transaction appears. However, these are not large deals, but rather medium and smaller companies. I would say that currently, the interest in acquisitions is somewhat higher on our side. Previously, the situation was reversed, and our companies, while they were not strong, were more engaged in simpler transactions in the east, and now they are more ready for serious, more sophisticated negotiations in western markets, including Slovenia – explained consultant Željko Perić.
