LJUBLJANA Dec 26 A decade ago, with Slovenia
cruising towards membership of the European Union, a local
brewery called Union caught the eye of Belgian beer giant
Union and its larger rival, Lasko, are national
treasures in Slovenia, a question of allegiance that divides
beer drinkers the same way soccer splits Manchester between City
Determined to keep Union in Slovenian hands, the country
used every trick it knew to thwart Interbrew's advances.
Finally it gifted Union to Lasko, brushing aside complaints
from Interbrew and creating a monopoly that to this day controls
80 percent of the Slovenian beer market.
Then came the hangover.
Ten years and millions of euros in accumulated debt later,
Lasko is one of dozens of companies controlled directly or
indirectly by the Slovenian state that face being sold in a fire
sale of national assets to steady the country's finances.
If all goes well, Slovenia will avoid becoming the latest
euro zone country to need a bailout. Its battle is a reminder
that the euro zone debt crisis is still casting shadows.
"We reckoned we all stood to profit," Dusan Siljan, a former
head of sales at Lasko who retired this week, said of the merger
"There would be no competition and, together, we had a
better chance of staving off a possible new takeover attempt by
Interbrew," said Siljan, who represents 1,000 small shareholders
controlling around 5 percent of the brewery.
Now, he says, Lasko risks being sold "far below the real
price", as Slovenia races to raise money, cut its deficit and
reform the public sector.
"PROTECTING NATIONAL INTERESTS"
The former Yugoslav republic of 2 million people, tucked
below the Alps, revealed a 4.8 billion euro hole in its mainly
state-run banking system two weeks ago, the result of loans
turned sour when exports hit a wall with the onset of the global
The government said it could plug the gap alone, without
becoming the latest member of Europe's troubled euro currency
union to need an international bailout.
But if the fix is to last, Slovenia must remake an economy
50-percent controlled by the state, and abandon a policy that
kept local firms in local hands while the rest of Europe's
ex-communist east threw open the gates to Western capital after
the Cold War.
"Lasko followed the policy of 'protecting national
interests', tacitly supported by the government," said Borut
Hocevar, an editor at the Slovenian business daily Finance.
But as the company's troubles grew, its share price steadily
fell from almost 100 euros ($140) in 2007 to a little over three
euros now. "Not selling my shares was the biggest mistake of my
life," said Siljan.
Slovenia now plans to abandon stakes in 15 companies,
including the biggest banks, the local telecoms provider and
national carrier Adria Airways. Unemployment, already over 12
percent, is likely to rise.
CRIPPLED BY DEBT
Lasko, though not on the list, is nevertheless at the mercy
of its chief owners - state banks now looking to divest.
In a complex ownership scheme typical of many Slovenian
companies, eight banks jointly control more than 50 percent of
Lasko and may have to sell their stakes as part of their own
Lasko's current market valuation of around 31 million euros,
however, is dwarfed by debts almost 10 times that amount. A
supervisory board meeting last week acknowledged Lasko was
struggling with short-term liquidity. The brewery declined to
comment for this article.
Saso Stanovnik, chief analyst at leading Slovenian brokerage
Alta, told Reuters:
"The most likely outcome is to find foreign buyers, possibly
some European breweries, for parts of the Lasko group. With
this, the story about 'national interest' in Lasko would have a
very ironic ending, but probably a useful one for its further
But even at a knockdown price, Lasko, one of the biggest
breweries in the Balkans, may struggle to find a suitor.
Under a previous management, Lasko went on a spending spree
that saw it acquire a mineral water bottler, a spa and juice
producer Fructal, which it has since spun off.
It also has stakes in a daily newspaper and almost 21
percent of leading retailer Mercator, itself a
takeover target of Croatian rival Agrokor.
"With the previous management, we were buying left, right
and centre and neglected our core business. If we had focussed
on that, today we could rightly say, 'recession? What's that?',"
NO FOREIGN SUITORS YET AS BANKS LOOK TO SELL
Reports in local media have homed in on Turkish brewery
Efes. But Tuncay Ozilhan, chairman of Anadolu Group
that owns Efes, told Reuters: "I am familiar with the company, I
know Lasko, but no, it's not true. We are not interested in
Heineken, also mooted as a possible buyer,
declined to comment.
Lasko's biggest shareholder, top state-owned bank NLB with
23 percent, declined to reveal its plans.
But local media said it would transfer its stake to a 'bad
bank' created by the government this year to ring-fence billions
of euros in bad loans and unburden the banks for easier sale.
The bad bank could hold on to Lasko or, more likely, sell it on.
Another bank, Nova KBM, told Reuters it would
definitely sell its holding in Lasko when it decides the time is
Hypo Bank, which has seven percent, said its main aim was
"to provide quality financial services rather than own stakes in
companies" - a sign it too may be pulling out.
In the first nine months of this year, Lasko posted an
operating profit of 26 million euros, down 11 percent on the
previous year. The net loss of 10.8 million euros was halved
from last year's nearly 22 million euro loss.
Workers at Union, located in a sprawling green and grey
complex just off downtown Ljubljana, were reluctant to discuss
their fate. "You should ask the management about that," said
But Andrej Skorja, a trade union leader, said there was
little doubt where the future lay.
"Foreign owners? That is effectively our future. I see no
other way, and we're ready for it. The only issue is whether it
will create problems for ... the employees."