Spate of business deals expected before year-end

The last quarter of 2004 seems to be promising many surprises on the business front, as the bear market seems to have caused the ground under many listed firms to have become shakier since the boom of 1999. Market sources see the smallest and weakest firms seeking partnerships or protection under the umbrella of big domestic or foreign groups. They argue that the cushion of huge capital gains that a large number of listed firms made during the boom has now evaporated and it is time for them to come face-to-face with reality: Further growth without exports, cost cuts and strong competitiveness cannot be achieved, while no one doubts that the days when the government could intervene by distributing favors to some Greek industries to maintain market shares have gone, never to return. Meanwhile several strong groups are forging ahead with expansion plans both at home and abroad. Aluminium of Greece It seems that the countdown has begun for the sale of the country’s largest aluminium concern, Aluminium of Greece, which recently came under the control of the sector’s global leader, Canada’s Alcan. Credit Lyonnais next week is expected to draw up a short list of prospective buyers and the winning bidder for Alcan’s 60 percent share in the Greek company is expected to be declared next month. Meanwhile, Alcan is expected to receive a feasibility study on the power plant that Aluminium of Greece will require for its operation after the expiration of its long-term contract with the Public Power Corporation in March 2006. The cost of the plant is seen as a key factor that will shape Alcan’s ultimate decision whether or not to terminate its presence in Greece. However, recent developments seem to weigh in favor of the withdrawal of Alcan, which has already communicated its intentions to the Greek government. The battle for the acquisition of control of Aluminium of Greece is heating up among the four contestants – two Greek and two foreign groups – that have come forward so far. The Greek groups which have submitted non-binding offers are Mytilineos and S&B Industrial Minerals, which is headed by the chairman of the Federation of Greek Industries, Odysseas Kyriakopoulos. The foreign bidders are Swiss trading company Glencore and Russia’s Rusal, the world’s third-largest aluminium company. Greece’s largest exporter, metallurgy group Viohalko, has been seen as a third possible Greek contestant for Aluminium of Greece. The group’s growth is spearheaded by members Elval and Sidenor. Elval’s UK subsidiary, Bridgnorth Aluminium, and Sidenor’s Bulgarian arm, Stomana Industry – both recent acquisitions – are becoming strong contributors to the group’s results. Viohalko is hoping to further enhance its profile with improvements in production, organization and commercial networks. According to sources, the group is planning another acquisition in Central Europe, with a view to bolstering its presence in the aluminium branch. However, the high price of the euro versus the US dollar is a negative factor that reduces the competitiveness of the group in dollar markets. Other brewing business developments include the recent hostile takeover bid by Greece’s biggest construction company, Hellenic Technodomiki, for leading wind energy company Rokkas, which holds considerable suspense. Rokkas has so far managed to thwart the bid but the bidder is not expected to give up. Separately, electronics and mobile phone retailer Germanos is expected to continue its expansion further into Eastern Europe after establishing a strong presence in Poland. UK retailer Dixons said on Monday it now controls 68.26 percent of electrical goods retailer Kotsovolos and is seeking to buy the remaining free float. Meanwhile, the National Bank of Greece is reported to be eyeing the Russian market, and other market sources see an extensive realignment of the coastal shipping sector, leading to the creation of two strong groups. Stockbrokerages The growing crisis in the stockbrokering sector as a result of the bear market in stocks is expected to come to a head shortly. Consultancy firm Kantor Capital forecast in a recent report a wave of mergers and liquidations, as the current average daily turnover of about 80 million euros on the Athens bourse is estimated to be 130 million short of what is needed to keep the present number of securities firms afloat. The present number, 84, is considerably higher than elsewhere in Europe. The 15 largest account for 67 percent of turnover and their share is growing, Kantor notes.

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