STA, 4 April 2022 - Croatian group Fortenova has become the sole shareholder of Slovenia's largest retailer Mercator after squeezing out all remaining small shareholders, leading to a suspension of trading on the Ljubljana Stock Exchange pending a decision on delisting.

The company, which owned roughly 90% of Mercator prior to the squeeze-out, said that it had paid EUR 22.4 million for the outstanding shares.

The transaction completes a process that began in 2014 with the purchase of Mercator by Croatian retailer Agrokor, said Fabris Peruško, the chief executive of Fortenova, a company that took over Agrokor's healthy assets when it went bankrupt.

"This was a long and demanding process with many legal and financial steps, all of which led to the final goal - the creation of a leading regional grocery retail chain," he was quoted as saying.

STA, 26 November 2020 - The retail group Mercator saw its sales revenue rise by 2.1% to EUR 1.6 billion in the first nine months compared to the same period last year, but the group operated with a net loss, which climbed to EUR 69m, shows a report released on Thursday.

It says that revaluation of the group's real estate on the one hand resulted in an increase of equity, while on the other it had a negative effect on operating profit.

Group revenue in the core activity of retail increased by 3.9% to reach EUR 1.3 billion, while earnings before interest, taxes, depreciation and amortisation (EBITDA) remained flat at EUR 126.3 million.

The ratio between net financial debt and EBITDA, which was at 6 in the first nine months of 2019, has improved to 5.3.

While posting a net profit of EUR 6.2 million in the same period last year, Mercator recorded a net loss of EUR 69 million in the January-September period this year as a result of the revaluation of the group's real estate carried out at the end of June.

In the January-September period, the revaluation of Mercator group's real estate on the one hand caused an increase of equity due to a property value increase of EUR 23.3 million, while on the other it had a negative effect on operating profit.

The net effect of revaluation was a real estate value decrease of EUR 45.7 million, which accounts for 4.6% of total value of land, buildings, and investment property. After the revaluation, their total value amounted to EUR 1 billion on June 30.

CEO Tomislav Čizmić said that "with responsible and timely preparation for the corona crisis ... Mercator Group succeeded in ensuring revenue growth and thus consolidate the foundations for further development".

Slovenia remains Mercator's largest market, where the core company Poslovni Sistem Mercator recorded a growth in sales revenue of 2.9% and a 5.2% increase in retail revenue. Net profit was down by over 30% to EUR 10.85 million.

The biggest rise in revenue was recorded in Bosnia and Herzegovina, and Serbia (+3.7% each), while Montenegro and Croatia saw a 14% and 4.8% drop, respectively, due to a drop in tourist activity. In Croatia, Mercator is active only in real estate, which however was also affected by the Covid-19 epidemic.

Despite the crisis, the Mercator group continues with the construction of a new logistics and distribution centre in Ljubljana, the report adds.

In the first nine months, the group invested EUR 22.9 million in fixed assets and divested EUR 5.6 million in real estate, devices and equipment.

The group obtained 16 new retail units in all its markets or more than 7,000 square metres of gross new surfaces, along with a 4,000-square-metre logistics centre and warehouse in Novi Banovci, Serbia.

At the end of September, the group employed 20,381 people or 2.8% more than in the same period last year, which means Mercator remains the largest employer in Slovenia and one of the largest in the region.

In September, the European Commission approved the transfer of the Slovenian retailer from insolvent Croatian Agrokor to its successor Fortenova. Now, only the Serbian anti-trust watchdog's approval is still pending.

Meractor expects the transfer to be carried out by the end of the year.

STA, 24 September 2020 - Mercator Group sales revenue increased by 4.4% in the first half of 2020 compared to the same period last year, to reach EUR 1.06 billion. Due to the revaluation of property and impairments of other assets, and the effects of Covid-19, the group posted a loss of EUR 69.2 million in the January-June period.

These factors excluded, the group would record a profit of EUR 86,000, reads a press release published on Thursday.

Consistently with the international accounting standards, revaluation of property on the one hand resulted in an increase of equity of EUR 23.3 million, while on the other hand it had a negative effect of EUR 69 million on the group's operating profit.

Despite the property revaluation, Mercator Group remains one of the largest property owners in Slovenia and the region with the total value of its land, buildings, and investment property amounting to EUR 1 billion.

"Despite the explicitly negative effects of the epidemic, Mercator Group succeeded in sustaining the positive trends especially in its core activity - fast-moving consumer goods retail," the group said.

Profit before tax, depreciation and amortisation (EBITDA) was up by 1.7% year on year to EUR 83.4 million, which the group says was achieved by "strictly executing the value creation plan initiatives" to offset all negative effects on its regular operations and performance.

Among the latter, the group listed higher labour costs due to the increase of minimum wage in Slovenia, payment of bonuses or allowances for employees working in extraordinary circumstances during the epidemic, as well as an increase in other costs resulting from epidemic-related restrictions and lockdowns in respective markets.

The company Poslovni Sistem Mercator, Mercator Group's largest company, saw its core activity sales revenue increase by 8.2% compared to the same period last year, while its total sales revenue rose by 4.8% to EUR 616.2 million.

The group recorded the biggest rise in revenue in the first half of the year in Bosnia and Herzegovina (by 7.8%). In Serbia, revenue was up by 5.1%, while in Montenegro it was down by 1%.

In Croatia, where Mercator is active only in the real estate business, which was strongly affected by the epidemic, revenue dropped by 14.5%.

Tomislav Čizmić, president of Mercator's management board, said that the success in the core activity was the result of a "timely, responsible, systematic and comprehensive preparation for the crisis".

He also stressed that the European Commission's giving the Croatian group Fortenova a concentration approval for Mercator earlier this week was an "extremely important step" towards the transfer of the Slovenian retailer from insolvent Agrokor to its successor Fortenova.

"The strong owner will enable Mercator's further growth and development and support Mercator's strategic projects, including a EUR 130 million investment in a new logistics centre in Ljubljana," he said.

STA, 15 June 2020 - The Competition Protection Agency has decided to extend the temporary seizure of Mercator shares from the retailer's owner, Croatian group Agrokor. The latter has still not paid a EUR 53.9 million fine issued for its failure to notify the anti-trust watchdog of the 2016 takeover of Slovenian-based bottled water company Costella.

The Slovenian anti-trust agency, on whose behalf the Financial Administration seized 70% of Mercator shares from Agrokor last December, confirmed the decision for the STA on Monday.

It said the measure was being extended to protect the fine decision in line with an option which allows the seizure to be prolonged. It would not say what steps would follow, while explaining a confiscation of shares can be extended only once for a maximum of six months.

The seizure has been upheld by the Ljubljana District Court while an Agrokor challenge has recently been rejected by the Constitutional Court.

The move means it remains impossible to transfer a majority stake in Mercator from insolvent Agrokor to its successor Fortenova.

The transfer was already expected at the end of last year, but a failure to obtain consent from Mercator's creditor banks complicated the affair. Slovenia's biggest grocer, which was sold to Agrokor in 2014, owes over EUR 100 million to creditors and the loans will need to be rescheduled in mid-2021. Mercator's management expects no problems here.

Responding to the anti-trust agency's latest decision, Fortenova said today that it had not come as a surprise and expressed expectation that Mercator shares would be transferred onto Fortenova by the end of the year. It also said that it would continue fighting against the seizure with any mean available.

Meanwhile, Fortenova head Fabris Peruško has recently said that legal proceedings are still under way with respect to the seizure. He did not provide details, while mentioning the paying of the fine as one option as he expressed his expectation that conditions would soon be met for the transfer of Mercator to Fortenova.

Along with the lifting of the anti-trust watchdog's measure and the consent of all 56 Mercator creditors, a nod from the European Commission is also needed for the transfer. Fortenova expects the EU's greenlight in a few months.

STA, 25 April 2020 - Retailer Mercator saw its sales revenue increase by 1.8% to EUR 2.14 billion in 2019 as net profit nearly tripled to EUR 4.7 million from EUR 1.6 million in 2018. Mercator also reduced its debt.

Revenue from retail sales, Mercator's core business, increased by 2.2% to EUR 1.7 billion.

Normalised gross operating profit (EBITDA) rose by more than 60% to EUR 172.5 million.

The retail group reduced its debt by almost a quarter last year, mostly as a result of its real estate monetisation. Net financial debt by comparable standards amounted to EUR 587 million and the net debt-to-EBITDA ratio was reduced from 7.2 to 5.2.

Mercator, a Ljubljana-based group, is part of the insolvent Croatian holding Agrokor.

Its transfer to Fortenova, Agrokor's successor, has been suspended after the Slovenian Competition Protection Agency temporarily seized Mercator shares Agrokor as security for a fine.

STA, 27 December 2019 - Agrokor, the owner of retailer Mercator, has turned to the EU to complain about the seizure of Mercator stock by the Slovenian Competition Protection Agency which it says is motivated by "national political reasons".

In a letter to Competition Commissioner Margrethe Vestager and director general of the Commission's directorate general for competition Cecilio Madero Villarejo and the leaders of anti-trust authorities across the EU, Agrokor lays out the recent procedures involving Mercator stock, which it says are contrary to EU and Slovenian law.

The letter comes after the Slovenian anti-trust watchdog seized Agrokor's nearly 70% holding of Mercator shares because Agrokor broke the law by failing to notify the agency of the takeover of Slovenian water bottling company Costella three years ago.

Agrokor was initially fined EUR 54 million, but the agency later decided to seize the shares as a way to ensure that the fine is paid.

Agrokor claims the share seizure is "unconstitutional, arbitrary and illegal," and in the letter to the EU authorities Agrokor chairman Fabris Peruško says that the Slovenian government is using the Costella fine as an excuse to prevent Mercator stock from being transferred from the bankrupt Agrokor to the newly-established entity, Fortenova.

"The agency has exploited this fine as an excuse to seize 69.9% of Mercator... These procedures run contrary to Slovenian national law and practice, as well as EU law and constitute a violation of international law," he says.

STA, 18 December 2019 - The Competition Protection Agency (AVK) has temporarily seized 70% of Mercator shares from its owner, Croatian group Agrokor. The move is to ensure that Agrokor pay a EUR 53.9 million fine the agency imposed in September after Agrokor failed to notify it of its 2016 takeover of Slovenian bottled water company Costella.

The agency decided to seize the shares on Monday, according to Wednesday's press release from Fortenova group, the successor of Agrokor which is in the process of taking over Agrokor's viable businesses, as Agrokor is buried under a massive loan debt.

Fortenova says that the anti-trust agency does not have the power to seize the shares, arguing such a move should have been made by a court.

The agency meanwhile responded by saying that the decision is not yet final and that it can be challenged with an appeal.

It cited on its website the regulation on which it based the decision, but could not comment any further, as the procedure is ongoing.

Economy Minister Zdravko Počivalšek said he believed that the agency was acting in line with rules and legislation, while again rejecting speculations that the Slovenian state was interfering in the transfer of Mercator to Fortenova.

The minister, who is on a working visit to Germany, also wrote in the response that he could not comment on the case, as neither the ministry nor him as the minister were acquainted with the agency's acts in individual cases.

"But I believe that the agency, when it comes to the failure to report concentration and the imposed fine, acts in accordance with the adopted rules and legislation," he added.

Počivalšek said that the public part of the agency's decision showed that Agrokor had been called on to report concentration related to the takeover of Costella, but had failed to do so.

Regarding speculations in the public about the state allegedly interfering in the transfer of Mercator from Agrokor to Fortenova, he said that "the rule of law applies in Slovenia, and institutions, including the agency, act independently".

Počivalšek said that the case should not be connected with relations between Slovenia and Croatia. "We are connected with many good joint projects and opportunities we must seize. We need to work on this."

Fortenova said earlier in the day that it plans to protect its assets with all means available, including by informing all embassies of EU countries in Slovenia as well as the US and Russian embassies of the agency's move.

Agrokor took over Costella's parent company three years ago. Since it failed to report market concentration, the watchdog imposed the fine on it three months ago. It now took a step further, seizing 69,57% of Mercator shares, worth EUR 140 million, from Agrokor.

Fortenova meanwhile argues that the decision on the fine is not final because Agrokor has lodged a request for legal protection. However, the agency has not forwarded the request to court, Fortenova says, launching instead the shares seizure procedure.

When the fine was imposed, Agrokor said that Costella was purchased by Agrokor's former owner Ivica Todorović without the knowledge of other executives in the group.

Fortenova finds it problematic that Agrokor's shares were seized based on regulations applying to offences, such as traffic offences, where the perpetrator is caught while committing an offence.

Fortenova claims that the watchdog intentionally abused the law to seize the shares.

Moreover, Fortenova CEO Fabris Peruško held a press conference in Zagreb today, with the Croatian press agency HINA citing him as saying the watchdog's move was designed to hinder transferring Mercator from Agrokor on to Fortenova.

All our stories on Mercator are here

STA, 27 November 2019 - The Slovenian retail group Mercator posted EUR 6.21 million in net profit in the first nine months of the year, down 30.3% year on year. The parent company's net profit was meanwhile up 7.6% to over EUR 15 million, the company announced on Wednesday.

Mercator explained in a press release that the group results for this and last year were not fully comparable because of a change in accounting standards and last year's sale of a hopping centre and land in Serbia.

The effect of the extraordinary effects excluded, the group's net profit would be higher by EUR 9.56 million.

The Mercator group increased its sales revenue by 1.6% to EUR 1.64 billion, and the parent company by 5.6% to EUR 929 million.

The group's net financial debt was down compared to the end of the third quarter last year by 18.1% or EUR 139.4 million to EUR 629.2 million.

Most of the decrease is accounted for by Mercator selling in February the premises of ten of its shopping centres to Supernova, which it now leases from the Austrian shopping centre operator.

The EUR 116.6 million from the sale was intended for settling financial obligations, the company said, adding that it would continue to sell non-core investments on all of its markets.

In addition to deleveraging, the group employing 19,800 people continues with its largest investment in history, a new logistics and distribution centre in Ljubljana.

"A clear strategy, new commercial platforms and new, innovative concepts increase Mercator's competitiveness and apparently produce good operating results," chairman Tomislav Čizmić said in the release.

The group's most important markets are Slovenia and Serbia, where it generated 57.3% and 31.1% of its sales, respectively. Sales in Montenegro accounted for 5.6% of total sales, and in Bosnia-Herzegovina for 5.1%.

Sales revenue in the retail segment was up by 1.4% to EUR 1.24 billion. In Slovenia alone, sales in this segment were up by 4.7% to EUR 691.4 million.

With a 69.57% stake, the Croatian conglomerate Agrokor is Mercator's largest owner, followed by Russia's Sberbank (18.54%), Hungary's OTP Bank (6.74%) and Austria's Addiko Bank (2.84%).

STA, 9 October 2019 - Economy Minister Zdravko Počivalšek expects that a draft agreement creating safeguards for Slovenian suppliers of retailer Mercator after its transfer to Fortenova will be ready soon. He was assured today that the retail group would not be cut up into pieces.

Počivalšek met representatives of Mercator suppliers, its bankrupt Croatian owner Agrokor, Agrokor's successor Fortenova, and its key creditor, Russian Sberbank in Ljubljana on Wednesday following reports that Fortenova was planning to cut off the Slovenia-based core company from its subsidiaries in Croatia, Bosnia and Serbia.

Related: Secret Plans to Cut Mercator into Parts to Repay Owner’s Debt to Sberbank

Speaking to reporters, the minister said that such a slash-up of Mercator would be unacceptable for the government. He was assured at the meeting today that a plan to that effect was not in the making.

He reiterated Slovenia's desire for Mercator to be allowed to continue to grow and develop. Being Slovenia's largest grocer, Mercator is an important company for the country in terms of jobs, suppliers and the revenue it generates, Počivalšek said.

He added that the government expected that the Slovenian suppliers would preserve an equal status under economic terms in the new group, and that Fortenova ensures Mercator's growth and development, and keep the group headquartered in Ljubljana.

"If they can guarantee us that, we won't have any problem with Mercator's transfer to Fortenova," he said, even though he does not have direct leverage on the process.

He noted that he had told as much to Russian officials at the Saint Petersburg Economic Forum last year and during Prime Minister Marjan Šarec's recent visit to Moscow, so he was critical the matter had not been dealt with.

He expects that Slovenian suppliers can agree a draft deal securing their present position on Mercator shelves also in the future with Fortenova and Sberbank within 10 days.

The suppliers' representative Izidor Krivec said the agreement could be agreed next week, by which time it needs to be aligned with the commitments negotiated by Croatian suppliers of Fortenova, as well a mechanism defined to monitor whether the agreement is being honoured.

The commitments would roughly pertain to a five-year period, but Krivec believes that they can keep their position also in the future as the consumer would dictate the choice on store shelves.

Fortenova's business policy would give priority to local suppliers, while Slovenian suppliers would like to come first in Slovenia, and right behind local suppliers in other markets.

Krivec also said that they had been given clear assurances today that Mercator would stay headquartered in Ljubljana, and that it would preserve its comprehensive business system.

Krivec expects Fortenova officials to honour their promises. Fortenova is to develop Mercator as the leading retailer in the region, invest in it and boost it. If so, Krivec is not concerned about Slovenian suppliers losing their market shares.

Agrokor's assets cannot be transferred to Fortenova until it gets a regulatory approval and the go-ahead from the 56 creditor banks of Mercator, including the Slovenian state-owned SID Bank.

When asked whether the agreement protecting Slovenian suppliers would prompt SID Bank to give its go-ahead, Počivalšek said the decision would be taken once the agreement was clinched.

STA, 8 October 2019 - Fortenova, the successor of the bankrupt Croatian food conglomerate Agrokor, is devising a secret plan to slash up the Slovenian retail group Mercator into parts and take control of the cash flows between the core company and its subsidiaries in Croatia, Serbia and Bosnia, the news web portal Siol reports.

Siol says that several sources have confirmed the plan is in the making, while Fortenova would not respond to the portal's questions. Fortenova would not need the consent of Mercator's creditors for the plan because their loans pertain to the core company in Ljubljana.

In its response for Siol, Mercator merely noted its role as the largest grocer in Slovenia and in the region and as such a platform for the long-term development of regional suppliers. "A successful financial and operational renewal of Mercator is what we believe the new owner will appreciate in all future decisions," the company is quoted as saying.

Siol says that Mercator's division into parts by countries would mean its irreversible folding into the concern Fortenova, which would assume control over Mercator Group's cash flows. The move would also undermine the position of Slovenian suppliers.

According to Siol, Mercator representatives have not been involved in the making of the plan, the ground for which started being prepared in the autumn when a taskforce started looking for synergies between the companies of former Agrokor.

The plan was given a new impetuous when the ownership of Fortenova passed into the hands of international banks and financial funds. Its biggest owner is the Russian state-owned bank Sberbank, whose sole interest is that it gets repaid a EUR 1.1 billion loan.

The debt's repayment depends on the financial sustainability of Fortenova, which in turn depends on Mercator. Without Mercator's cash flow, the financial architecture of Fortenova would collapse, and so would the Russian bankers' calculations, Siol writes.

Mercator remains in Agrokor's ownership as all creditor banks as well as the regulator need to give their go ahead for the retailer's transfer to Fortenova. The banks NLB and Abanka are said to have given their consent, while Siol's information indicates that the state-owned SID Banka and Bank Asset Management Company are not planning to give theirs for the time being.

Fortenova notified the European Commission of its Mercator concentration plan for Slovenia and Croatia in August. While the Slovenian competition watchdog has decided not to re-examine broader implications of the concentration, the Serbian market regulator did opt to do so at the end of last week.