Mergers seen quite soon

It is possible that we will witness a complete realignment of business forces in coming months, in the form of mergers or new entries in the domestic market and the stock market. Serious moves are apparently under way in the banking sector, with several small and medium-sized industrial and commercial enterprises also involved. Bank managers say that half the companies making up the FTSE/ASE Mid-40 index could soon disappear. Domestic companies, fearing a combination of domestic demand and the entry of multinationals into the Greek market, are seeking their salvation in mergers. The goal is to create bigger companies that will compete more effectively with the new market entrants. Strengthening the capital base and achieving economies of scale is considered unavoidable for the survival of several companies and is even more so if their ambitious plans for further expansion in the Balkans are to materialize. Also crucial to survival are cost-cutting and an increase in productivity. One should also not overlook the fact that listing on the Athens Stock Exchange, especially under the recently tightened rules on corporate governance, is a costly endeavor. Thus, the presence of four of five listed firms belonging to the same group has come to be considered a luxury that offers no tangible benefits. It was in that spirit that the Hellenic Technodomiki-TEV construction group announced a few days ago that it was absorbing subsidiary Aktor, a mid-cap index company. The Stassinopoulos, Mytilineos and Daskalopoulos (Delta) business groups also have several listed companies and are considering their future. The metals sector has witness serious consolidation over recent years but there is still room for important moves. There are also many listed firms that are subsidiaries of foreign multinationals and whose parent companies are, at best, lukewarm about continued listing. A few years back, Crown Hellas made an unsuccessful attempt to delist through a buyout offer to all minority shareholders. A likely sale of National Bank’s stake (26.41 percent) in Heracles cement would become the catalyst for developments in the cement industry. Despite repeated denials by Societe Generale, many believe that the French bank will ultimately make a public offer to delist Geniki Bank. Developments are also taking place in the retail sector, as a combination of heavy indebtedness and the entry of European multinationals have made it very difficult for domestic firms to compete. Already, Radio Korassidis, one of the most dominant players a few years back, is essentially out of the game; other local players are frantically trying to strengthen their positions. Developments are awaited in the banking sector. Rumors persist that French bank BNP is mulling the takeover of a domestic bank, even one of the bigger ones. Talks between Emporiki and Credit Agricole are continuing, although a major Greek bank could intervene by making a bigger offer for Emporiki. Domestic consolidation or international alliances are the only two options for Greek banks if they want to compete strongly in the Balkans.