ECONOMY

Water deal clogged

BELGRADE (Reuters) – Serbia’s securities regulator resisted pressure from the Cabinet yesterday to annul approval for a London-based hedge fund to launch a takeover bid for up to 40 percent of beverage firm Knjaz Milos. The Securities Commission said it would not annul the approval it had issued to Cayman Islands-registered FPP Balkan Limited, part of the London-based FPP Group, even after a request from the minister for foreign economic relations. «Minister (Predrag) Bubalo asked us to annul this approval. That is out of the question. We are not going to annul it. We acted fully in accordance with the securities law,» Securities Commission member Dejan Eric told Reuters. The company’s general manager, Radenko Marjanovic, had urged the state to prevent what he called a hostile takeover bid by FPP Balkan because the new minority shareholder offered no job guarantees to workers. The comments came in a statement to the Beta news agency. The leader of the Knjaz trade union, Zivorad Kolarevic, said workers would launch a general strike to prevent the takeover. The takeover bid for Serbia’s leading mineral water producer was launched a day after the government gave Knjaz Milos and US basketball star Vlade Divac a September 6 deadline to strike a partnership deal. Divac entered partnership talks with Knjaz last year and has been a sentimental favorite to keep the mineral water brand in local hands. «Knjaz and Divac only signed a memorandum of understanding, which is not a legally binding document,» Eric said. FPP Balkan said on Monday its bid did not prevent Divac from gaining a majority stake in Knjaz. Local media said the takeover bid meant the fund would pay up to 20 million euros ($24.51 million) if it bought 40 percent of Knjaz, unlike Divac who would need 70 million euros to recapitalize the firm, invest in it and pay redundant workers. Knjaz is 41.28 percent owned by the state. The remaining stake belongs to small shareholders. The Economy Ministry and the Privatization Agency kept mum yesterday, and sources close to the government said it faced a difficult choice how to react.