On Friday, 1st April 2022 Fortenova Group acquired all remaining shares of Mercator and became 100% owner of Mercator. With the transfer of 621,251 shares to Fortenova Group the process of squeezing out minority shareholders from the ownership of Mercator has been completed, and Fortenova Group has become the sole shareholder of Mercator.
“With this last transaction we have completed the acquisition process that started back in 2014, and the fact that this last step was taken on the third anniversary of Fortenova Group’s operations has a particularly symbolic meaning for us. It was a long-lasting and challenging process, with lots of intermediate legal and financial steps that were all leading to one and the same goal – forming the leading regional grocery retail chain.
Over the last year since the formal transfer of Mercator to Fortenova Group’s ownership we have concluded the squeeze-out procedure, but more importantly, we have started to unleash the full potential of our business model in retail by achieving significant operating synergies that we are reinvesting back into the Group” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of acquiring the 100 percent ownership share in Mercator.
He also pointed out that Mercator is the leading grocery retailer in Slovenia, with significant shares in Serbia and Montenegro, and Konzum is the leading grocery retail chain in Croatia whilst both Konzum and Mercator have a significant combined share in Bosnia and Herzegovina. “The synergies available to Konzum and Mercator by working together as part of the region’s largest retail group are numerous, which provides leverage for further strengthening our leading positions on the markets” – he said.
„The payment to minorities of EUR 22.4 mn was made using Fortenova’s own internal cash and demonstrates the increasing financial and operating strength of the Fortenova Group. The Group has made great progress over the last few years, this latest transaction completes another step in our plans and gives us further opportunity to invest and grow”, said James Pearson, Fortenova Group’s CFO, commenting on the transaction.
With a view to additionally connecting and strengthening the synergies in Fortenova Group’s retail operations in Bosnia and Herzegovina, the companies Konzum and Mercator in that country shall as of 1st September 2021 be run by management boards having the same composition.
Thus Nihad Imširović is President of the Management Boards of both Konzum B&H and Mercator B&H, Nedeljka Bilić is Member of the Management Board for Finance at both Konzum B&H and Mercator B&H, while Members of the Boards of both companies are Ahmet Koštreba and Haris Omeragić.
“This is yet another step in strengthening our leadership position in regional retail, primarily built on a combination of knowledge, experience and the capabilities of both companies’ employees, as well as reaping the benefits of state-of-the-art technologies, particularly when it comes to improving service quality and providing our customers with a premium shopping experience. This is the foundation upon which we have been building a stronger and more competitive retail business, while fostering all the well-recognized specific features of the Konzum and Mercator brands. I wish all colleagues who are assuming joint responsibility for this mission of ours a lot of success” – said Siegfried Ganshorn, Fortenova Group’s CEO for Retail.
Today 69.57 per cent of shares of Poslovni sistem Mercator have been transferred from Agrokor d.d. to Fortenova Group, whereby Mercator has become an integral part of the Retail Division of Fortenova Group, which now owns 88.1 per cent of Mercator shares. The transfer of Mercator shares was simultaneous with the refinancing by Fortenova Group of the debt that Mercator had with 55 banks, in the total amount of EUR 385 million. In cooperation with its creditors, HPS Partners and VTB, Fortenova Group has secured the required funds to entirely replace Mercator’s aforementioned debt and thus ensured seamless transfer of ownership of Mercator from a bankrupt to a stable company with a consolidated ownership and creditor structure. As of today, Fortenova Group’s retail network consists of around two and a half thousand Mercator and Konzum points of sale with a total of 39 thousand employees working on five markets in the region, with a population of almost 20 million people.
Agrokor had acquired Mercator shares in 2014, but until today Mercator was not operationally integrated into the business of its owner. “As of today Fortenova Group is proud owner of Mercator, decided in the intention to be the best owner that Mercator has ever had. This is a new beginning that opens up a number of new possibilities for all of us. Fortenova Group’s new, optimized capital structure provides for stability and the ability for strong investments in our companies going forward to drive their future growth. With Mercator within Fortenova Group we are consolidating the region’s largest retail network, increasing the stability of the supply chain, jobs and tax revenues of the countries in which we operate as well as opening new opportunities and continuing to support the growth of local suppliers” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors. Peruško pointed out that following the integration of Mercator and the divestment of the Frozen Food Business, with over 50 thousand employees Fortenova Group will be the region’s largest employer, generating approximately EUR 5 billion in revenue, operating profits of more than EUR 270 million and planning for this year, in spite of the continued pandemic, to realize more than EUR 125 million of capital expenditures.
“Today’s closing of the additional financing to enable the Mercator transfer is fully in line with our strategic financial plans. We have made great progress over the last few weeks in delivering on our plans not only with this refinance arrangement but also with the Frozen divestment, other non-core sales and with a very strong Q1 business performance. At the heart of this has been a multinational, multi-location team that has been completing a really large amount of work and they deserve huge credit for all that has been achieved” – commented James Pearson, Fortenova Group’s Chief Financial Officer.
Siegfried Ganshorn, Fortenova Group’s Executive Director of Retail, called the transfer of Mercator to Fortenova Group “one of the most important days in the history of Mercator, Konzum and Fortenova Group”. “To be where we are today would not have been possible without our people, the professional management, the support and help of our suppliers and all other partners and stakeholders that we trust. Our joint efforts will enable us to utilize our full potential to the benefit of our customers” – Ganshorn said. As the crucial parts of Fortenova Group’s retail development strategy he singled out the operational excellence, the clear differentiation against competitors, the continuous improvement of the business’s position and increase in market share, the flexibility of microlocations and the true multichannel experience. “The foundation and the key factor that will enable us to realize that is the developed digital transformation strategy, due to which our significant investments will be into digital development and e-commerce, intended to drive growth in all countries” – Ganshorn concluded.
“Mercator today is not only a retailer, but much more. It is a platform connecting employees, customers and suppliers, that has successfully developed numerous new sales concepts. The employees’ knowledge, efforts, experience, abilities and sense of belonging are the creators of Mercator’s success. Being a company that cooperates with over three thousand suppliers and realizes purchases worth EUR 1.2 billion a year from local and regional partners, this merger provides a great business opportunity for the long-term development of their brands” – said Tomislav Čizmić, President of the Management Board of Mercator. In his words, along with the continued accelerated digitalization and the development of digital multichannel platforms, Mercator’s priorities in consolidating Fortenova Group’s retail are the strengthening of the store network and the development of a modern logistics infrastructure.
“Over the last two years since the Settlement Plan implementation and the successful financial restructuring of the overleveraged Agrokor, Fortenova Group was able to achieve a high operational performance, as reflected in increased operating profits by around EUR 100 million in the period from 2017 to 2019, as well as in a cash flow improvement of almost EUR 100 million during 2020, in spite of the negative effects of the COVID-19 pandemic on the operations. Fortenova Group has also strengthened its capital structure and improved its financial position, with the leverage ratio reduced from seven to around four times, as expected to be achieved by the end of this year. Hence, after a long period of uncertainty, today Fortenova Group is a financially stable company that is beyond any doubt capable of growth and that will, with its development strategy and by realizing its priorities, also preserve existing and open new jobs. I therefore wish all our colleagues from Mercator a warm welcome to the large community of Fortenova Group’s hard working and talented employees. I also look forward to continuing the cooperation with our key partners, small and large, local and global suppliers and to our common further growth” – concluded Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.
On Tuesday, 30th March 2021, the process of transferring the shares of Poslovni sistem Mercator to Fortenova Group has started. The shares held by Sberbank in Poslovni sistem Mercator were swapped for shares in Fortenova Group and thus 18.53 percent of Mercator shares were transferred to Fortenova Group.
“Yesterday’s commencement of the Mercator share transfer to Fortenova Group and the divestment of the Frozen Food Business Area concluded on Monday are part of Fortenova Group’s portfolio optimization intended to strengthen and consolidate the capital structure and key areas in which Fortenova Group is market leader. Once the Mercator share transfer to Fortenova Group is completed, together with Mercator Fortenova Group will be the indisputable regional market leader in retail, with significant capacity for investments and further growth” – said Fabris Peruško commenting on the commencement of the Mercator share transfer procedure.
Peruško also pointed out that in the year of the pandemic Fortenova Group companies have been key in securing the provision of supplies for customers on the markets of their operation, also due to thousands of large and small, local and international suppliers that Fortenova Group companies have had long-standing and stable business relations with.
“The forthcoming integration of Mercator with Fortenova Group’s retail is a great opportunity for all key suppliers” – Peruško emphasized, adding on the report of the Slovenian Extraordinary Commissioner at Mercator published on Wednesday which has confirmed full compliance of Mercator’s operations with the Slovenian Lex Mercator. The Report points out that Mercator has offered its strategic suppliers in Slovenia to sign long-term cooperation agreements, signed by all those who have found their business interest in such agreements.
On 5 March 2021, the Commission for Protection of Competition of the Republic of Serbia approved the intention of Fortenova Group to acquire control over the company Poslovni sistem Mercator d.d., Ljubljana also on the Serbian market.
With this decision of the Serbian Commission, Fortenova Group has fully met the regulatory prerequisites of obtaining approval for the concentration with Mercator from the competent national regulatory authorities for the protection of market competition in all required territories – Serbia, Bosnia and Herzegovina, Montenegro and Northern Macedonia. At the same time, with the concentration approval issued by the European Commission, this prerequisite has been met for the entire EU territory.
“With this decision another formal obstacle has been removed for the realization of Mercator’s transfer to Fortenova Group. We expect the transfer of shares from Agrokor to Fortenova Group to happen by the end of March 2021 which will enable us to start consolidate and further develop our regional retail network” – said Fabris Peruško, Chief Executive Officer of Fortenova Group, commenting on the decision of the Serbian Commission.
The European Commission has cleared the intention of concentration whereby Fortenova Group acquires control over Poslovni sistemi Mercator, Ljubljana.
For the territories of Serbia, Bosnia and Herzegovina, Montenegro and North Macedonia the concentration was filed with the competent local market competition regulators and all national authorities except for the Competition Commission of the Republic of Serbia have now approved the concentration.
“We are pleased with the decision of the European Commission to approve the transfer of Mercator from Agrokor to Fortenova Group has been given. We expect that the approval from the Serbian Commission will follow shortly. This has paved the way for the transfer of Mercator to be realized by the end of this year and for Fortenova Group’s retail as of 2021 to start acting on the market as a common, regional group, whose operations are in the interest of all stakeholders – from employees through suppliers and shareholders to the entire economic environment, both in the national states and regionwide” – said Fabris Peruško, Chief Executive Officer of Fortenova Group commenting on the EC decision.
“A strong owner will enable Mercator’s further growth and development, and support Mercator’s strategic projects, including the 130-million-euro investment into a new logistics centre in Ljubljana,” added Tomislav Čizmić, President of the Management Board of Mercator.
Roto dinamic to assume the entire HoReCa sales channel in the beverage segment at Fortenova Group level
Wholesale part of Konzum (former Velpro Centar) to focus on the distribution of food and non-food assortment in the HoReCa channel and cooperation with the small independent stores and Plus Markets
Fortenova Group made the decision to consolidate the beverage distribution for the HoReCa channel within Roto dinamic. In early February 2020 the project of splitting operations within the wholesale segment of the Group will be initiated, within the scope of which Roto dinamic will focus on the beverage segment in the HoReCa channel, while Konzum, with which Velpro-centar merged at the end of last year, will place its focus on the distribution of food and non-food assortment in HoReCa channel. In addition, Velpro will continue cooperation with small stores and the independent retail segment, continuing to develop the Plus Market segment.
With total revenues of HRK 954 million in 2019 and more than 600 employees, Roto dinamic operates through 15 sales and distribution centres, daily distributing its portfolio of beverages and additional assortment to more than 7,000 points of delivery. During the season that number grows to more than 10,000. Roto dinamic also operates discount retail stores ideal for all beverage customers, from HoReCa businesses that account for more than 70% of customers, to individuals looking for the ideal price-quality ratio and a high level of service.
„Roto dinamic has been operating for 28 years and has grown from a local distributor to the national wholesale operator providing full service to all our customers. Taking over the complete customer network of the HoReCa channel in the beverage segment has been a natural step forward for us, as on a dynamic and challenging market both our customers and our suppliers are looking for a reliable partner in sales and distribution, as they are aware of all the challenges in doing business during the season when the majority of revenue is generated. Our strength certainly lies in our focus on the customers and their needs and this is why we are today an agile company, with a high level of service irrespective of where our customers are located, being able to respond to all their needs“, stated Siniša Mužić, Director of the company Roto dinamic.
Velpro has been present on the Croatian market for 19 years and it generated revenues of HRK 1.151 billion last year. It operates through 16 sales and distribution centers with over 850 employees, offering more than 10,000 SKU’s to its customers.
“After the merger with Konzum, Velpro has additionally strengthened its operations and secured sustainability in the long term. Over the years we have been recognized by our customers as a significant strategic partner in the development of independent retail trade and HoReCa in Croatia. The wholesale segment’s new specialisation will provide an even stronger focus on the distribution of food and non-food products in the HoReCa channel. The strengthening of tourism and the HoReCa segment is Velpro’s long-term strategic objective, having infrastructure and service quality able to meet our customers’ needs. We will continue to work on adjusting our services and assortment in accordance with their needs. The wide assortment of products is available to our customers through distribution and in 16 Cash & Carry centers, where they can purchase, in a time-efficient manner, everything they need for their restaurants, hotels, stores and other retail facilities. Today Velpro does business with more than 5.000 legal entities, whereby 450 operate under the small store brand Plus Market. We will also maintain strategic cooperation with all small independent storeholders’ associations in the territory of Croatia”, – said Slavko Ledić, CEO of Konzum.
Further consolidation of wholesale within Fortenova Group will provide for an even greater business focus and specialization. This will result in a higher level of service for the wholesale customers, optimisation of the supply chain and business overall, and better use of synergies. With a clear strategy in place, both companies will achieve the maximum effect in sales and distribution and provide a focused wholesale service to the target customer groups, responding to all of their needs.