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Knjaz Milos bidding set for new heights

14-Sep-2004

The Serbian Privitisation Agency says that all the current bids for mineral water bottler Knjaz Milos will fail because they are too low, a fact that is likely to lead to a second round of more heated bidding. And with interest in the company still mounting, Coca-Cola is now being tipped as a likely entrant.

Mica Petrovic, project manager for the Serbian Privatisation Agency, believes that all the bids are doomed because the company is being undervalued. "Knjaz Milos is one of the strongest brands in Serbia and it is widely believed that given the right financial resources it could be developed into something much stronger," said Petrovic. He added that the mineral water source has huge development potential, which would be tapped into once the company had secured a sound investor. Indeed, once the sale of the shares is secured, the company has already said that it intends to go ahead with plans to spend €20 million to develop production.

Petrovic is convinced that, given this investment potential, the first round of bidding will now collapse and that a second round of investment will almost double the share value for the first round of bidding.

 

"I believe that this second round of bidding will attract even more attention than the first and in turn even bigger companies will join in," Petrovic said. "This should up the stakes to around CSD 20,000 (€253) per share and once the share value reaches this level it is likely that bigger names such as the Coca-Cola Company will enter the arena."

 

Only yesterday, French dairy and water bottling giant Danone upped its bid for the company, which is now said to stand at CSD 15,000 per share. Danone is one of three remain bidders, the others being Slovenian beer producer Lasko and Cayman Islands registered investment group FPP Balkans.

 

Danone has so far offered the lowest bid for Knjaz Milos , but the group has said that it would like to take anything from 28 per cent to 100 per cent of the share stock, which represents a total of 700,000 shares. FPP Balkans has offered the highest bid per share at CSD 17,200 for between 25 - 40 per cent of the shares, whilst Lasko has offered CSD 16,100 for as much as 50 per cent of all shares.

 

At the end of last week, a last minute bid headed by LA Lakers star baseball player and Serbian national Vlade Divac was withdrawn. The bid had received much media attention and had been hotly tipped by analysts as being viable in view of the fact that the company would have remained under Serbian control. Divac said that he had placed his maximum bid and that it was now over-priced.

 

With sales of around €70 million in 2003, Knjaz Milos is currently the market leader for bottled water in Serbia thanks to strong brands such as Knjaz Milos and Aqua Viva. Although the company's sales pale in comparison to the world's largest water bottler, Nestlé Waters, which currently has a turnover in excess of €5 billion, Knjaz Milos has also developed a firm export market for its products to countries such as Sweden, Hungary, Canada, Germany, Russia, Australia and Switzerland.

 

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