Case study

Mercator-H in Zagreb & Karlovac have been acquired by KTC d.o.o.

Mercator–H d.o.o., a fast-moving consumer goods (FMCG) retail chain based in Croatia, has sold its 3 stores in Zagreb and Karlovac to KTC d.o.o. for an undisclosed consideration.

Mercator-H in Zagreb and Karlovac is the business unit of the retail network under the Mercator brand, which consists of 3 stores located in the Zagreb area and the town of Karlovac.

KTC d.o.o. is a leading regional FMCG retailer with more than 20 supermarkets. Apart from retail, the company is engaged in hospitality business and also owns a gas station chain and has recently expanded its business into the agriculture sector.

Mercator-H d.o.o. is a FMCG retail chain developed on a national level with hypermarket, supermarket and convenient stores formats. Ranked within the top 10 chains in Croatia, Mercator-H is the Croatian subsidiary of the biggest regional FMCG retailer, Slovenian-based Mercator Group, which was recently acquired by the Croatian-based Agrokor Holding.

Oaklins' team in Croatia acted as the exclusive advisor to the seller in this transaction.

Agrokor from Zagreb is the largest company in Croatia, which has developed its operations in Croatia, Serbia, Bosnia & Herzegovina, Slovenia and Macedonia. The largest company within the Holding and the backbone of Agrokor is Konzum, the biggest regional food retailer. Apart from Konzum, Agrokor owns some of the leading food manufacturers and brands in the region: Ledo (regional leader in ice cream and frozen food), Jamnica (regional leader in spring and mineral water), Zvijezda (regional leader in oil and margarine), PIK (leader in processed meat) and Belje (the largest agricultural producer). Following Agrokor's acquisition of Mercator-H, a Slovenian food retailer which also had a strong presence in Croatia, the Croatian Competition Agency (AZTN) ordered Agrokor to decrease a combined concentration of Konzum and Mercato-H stores in the Croatian market. According to AZTN's resolution, Agrokor had to divest over 90 stores with combined revenues of more than US$160 million.

Oaklins' team in Croatia was chosen by Agrokor as the exclusive advisor and coordinator of the entire divestment process. Strict requirements imposed by AZTN on one side and ambitious goals of the client on the other, combined with tight deadlines, made our team's task very demanding and consumed a lot of internal resources. AZTN ruled that all stores had to be offered publicly to allow any interested bidder from the industry to participate in the process. The team coordinated a multitude of interested parties with competing interests for a different number and combination of stores, at the same time taking care of AZTN’s imposed obligation to favor direct over indirect competitors. The fact that some stores were owned by Konzum, some by Mercator and some were rented from third parties, added up to the complexity of the transaction in respect to the valuation, due diligence, documentation preparation, negotiations and transactions’ structuring. Oaklins' Croatian team managed to preserve the client’s best interests throughout the process, coordinating a multitude of stakeholders and fully complying with AZTN’s resolution.

Tombstone image for Mercator-H in Zagreb & Karlovac have been acquired by KTC d.o.o.

Key deal contacts

Željko Perić

Croatia

Principal

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