Čakovečki mlinovi: The Creation of a ‘Small Agrokor’ Directed by Pension Funds with Plodinec Family in the Leading Role

The first major split among the larger shareholders of Čakovečki mlinovi occurred four years ago when the Management of the company, then still led by Stjepan Varga, who was also the largest individual shareholder, made a pivotal strategic decision that the company would increasingly focus on retail rather than flour production and baking. Several large shareholders who disagreed with the new development strategy sold their shares to pension funds, which, on the contrary, supported Varga and confirmed their support by increasing their stakes in Čakovečki mlinovi.

The second major split among the co-owners occurred last year when representatives of the Polish private equity fund Enterprise Fund VII knocked on the doors of Čakovečki mlinovi with a (presumably generous) offer to sell the retail business of the Čakovec company to Studenac. It is rumored, and we heard this from very well-informed sources, that the pension funds were inclined to accept the offer, but Varga flatly rejected it. The consequence of this ownership disagreement regarding what is best for all stakeholders of the company was yet another pivotal decision by Varga, realized last week: after nearly three decades in which he was the alpha and omega of Čakovečki mlinovi, Varga, together with his wife Ružica, sold 24.78 percent of the shares to the Sisak company Mlin i pekare, controlled by the Plodinec family.

Too Many Unusual Details

Immediately thereafter, a contract was concluded for joint action between the pension funds (Allianz ZB and PBZ Croatia osiguranje), Mlin i pekare, and the Plodinec company, which now together hold 64.53 percent of the shares in Čakovečki mlinovi, resulting in their obligation to publish an offer for the takeover of the Čakovec company. However, until Hanfa approves the publication of their takeover intention, which will only happen after the concentration notification procedure is conducted at the Agency for the Protection of Market Competition and approval is obtained, the public will remain unaware of the intentions of the acquirers of Čakovečki mlinovi and what they actually aim to achieve.

Unlike the acquirers, who are not allowed to disclose anything to the public before announcing the takeover offer, independent analysts are allowed to, but generally do not wish to. One of them explained to us that he does not want to speculate ‘because he has known Stjepan Varga for too long and does not understand what could have compelled him to sell his stake in the company he created’, while another candidly told us that ‘he does not know what to think about it at all, there are too many unusual details, and he does not see what synergy and added value could arise from this acquisition’. To be clear, this is a seasoned analyst who knows the market for milling and bakery products and the state of domestic retail equally well, but, like most others, the Plodinec family remains an enigma to him.

Although in Croatian conditions they rank among larger entrepreneurs, among the multitude of self-effacing entrepreneurs in Croatia, the Plodinec family is probably the most self-effacing and least known not only in the broader business community but also in the industries in which they operate. If they succeed in acquiring Čakovečki mlinovi and decide one day to consolidate all the companies they own into one, they could call it ‘Čakovečki mlin i pekara Klara’ and even that name would not encompass everything.

In addition to Mlin i pekare, under the ownership control of Plodinec are also Zagrebačke pekarne Klara, Prehrana trgovina, the company Papuk Našice, and the company Plodinec. Altogether, this amounts to about 215 million euros in revenue last year, primarily generated in two segments, milling and baking, as well as retail. With the Čakovečki mlinovi Group, this amount would increase by another 183 million euros.

Read the entire corporate story about Čakovečki mlinovi in the new issue of the printed and digital edition of Lider.