ECONOMY

Wave of mergers expected in 2002

A wave of mergers is expected among listed firms on the Athens Stock Exchange (ASE) as managers are seeing company valuations subside during the current market slump. The rationale behind the expected trend is that companies will prefer to show a lower stock market value and a clearer business image than continue to maintain subsidiaries or affiliates that render them more valuable in the recession that has hit Greek industry. Global experience shows that a cycle of mergers in a stock market lasts about one financial year, and ASE seems to be set for such a cycle, driven by the large business groups. One of the most common practices in stock markets is to follow the leaders. According to the prevalent view, they know what they are doing. The following mergers are in the works in Greece at present: the Athens Medical Center with its subsidiary Palaio Faliro Medical Center and Piraeus’s Iasis private clinic; Grigoris catering firm with Neon cafe-restaurants; Klaoudatos department stores with Elephant electrical retailers; and Kyriakidis Marbles with FHL and Marbles – Construction Materials (these were approved by the ASE on Friday). More are pending this week, notably Intracom telecom equipment with subsidiary Intrasoft, Atermon with Alma Media Center, Neorion shipyards with Tiama, Hellenic Fabrics with Macedonian Spinning Mills, Helios Textiles with Ten Cate, Radio A. Korassidis with Mokas and Kasapoglou electric retailers, and EFG Eurobank with Telesis Investment Bank. On the whole, business realignments outside the banking sector could be described as unassuming over the last two years, after a strong wave in 1998-99. But now, the introduction of the euro on January 1 and the fact that every investor will be able to make comparisons between enterprises in Greece and the rest of the eurozone makes the task of entrepreneurs, who will face intensified competition, more difficult. Realignments may be expected in the stock holdings of the following enterprises next year: the Agricultural Bank group controls or has large stakes in Agricultural Insurance, Hellenic Petroleum, Hellenic Duty Free and Hellenic Sugar Industry; the EFG Eurobank group in Ergo Invest, Computer Logic, Ergodata, Lamda Development, Investment Development Fund, Eltrak, and Greek Progress Fund. Piraeus controls its subsidiaries Piraeus Investments and Piraeus Leasing, which lately has been energetic in striking alliances in various sectors. The Commercial Bank group plans to merge its two listed insurance subsidiaries, Metrolife and Phoenix. It controls Commercial Investment. Klonatex Holdings has stakes in Naousa Spinning Mills, Doudos, Yiannousis and Fanco. Hellenic Bottling Company controls Frigoglass, Ideal, Allatini Mills and Plias, which together with Katselis have investment plans in Nigeria. But the crown of all this merger activity, and the largest such move in the history of the Greek economy will be the merger of the two largest banks, National and Alpha. It has, however, to be supplemented with a set of coherent economic measures aimed at boosting the supply side to ensure a lasting, sustainable high growth-low inflation combination in the years to come.