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A closer look at public M&A deals in the Balkans

Although purely based on statistics, public takeovers in the former Yugoslav republics seem to be in a healthy condition with 15 out of 39 investments in or acquisitions of listed companies across emerging Europe taking place in these states. A deeper look reveals an entirely different picture.

For historic reasons mainly linked to the post-socialist privatisation process, a number of companies in this region are still publicly traded. On the other hand, very few companies have listed on domestic exchanges in recent years. In this article, Marija Tešić of CMS Serbia, and Saša Sodja of CMS Slovenia, consider the state of equity capital markets and public takeovers across the western Balkans.

Capital markets in the western Balkans are, as a rule, quite silent. Marija Tešić says: “Public joint stock companies are historical facts; they ended up on the stock exchange mostly as part of a privatisation or ownership transformation. Many listed companies have a large number of minority shareholders, mostly employees and former employees, or in some cases all adult citizens of a country.” A good example is the tourist industry in Croatia, where many hotels and resorts have been subject to public takeovers in recent years.

Other companies are joint stock companies due to applicable regulatory regimes, which is the case in banking sector. Tešić adds: “Furthermore, contrary to the rest of Europe, there are almost no initial public offerings in this region”. IPOs on the domestic stock exchanges are few and far between, such as the 2018 IPO of Fintel Energija on Belgrade (the first in 78 years) and the listing of Span on the Zagreb Stock Exchange – the first in 18 years. Other exchanges in the region are even less active.

The large number of minority shareholders is one of the main obstacles in public takeovers gaining approval from local regulators.

Marija Tešić says: “When considering takeover bids, as a rule regulators struggle with minority shareholders being unsatisfied with the price offered. Individual shareholders are mostly unfamiliar with the legal requirements and may respond quite emotionally to an offer”. Unfortunately, the rare takeovers that do happen end up in court, and are usually resolved in favour of the minority shareholders. This challenging regulatory regime discourages foreign investors from investing in public companies.

Saša Sodja says the similar: “In our experience, common issues and potential disputes are related to sale conditions, especially the offered share price, in takeover bids or in subsequent squeeze-outs, and particularly in the case of voluntary bids. It is also difficult to predict beforehand how regulators will decide certain issues.

In Slovenia, public takeovers are relatively frequent. In 2021, it saw the largest public takeover in the region with OTP bank of Hungary’s EUR 1bn acquisition of Nova KBM. Saša Sodja says: “The Slovenian legal regime, which may seem unusual from the perspective of other countries in the region, subjects not only listed companies to a takeover regime, but also non-listed joint stock companies whenever the criteria regarding size is met. This results in a higher number of public takeovers.

She continues: “The aim of the Slovenian regime is to protect minority shareholders, but the regime is not itself intended to contribute to a more eventful capital market; at least, as long as the takeover is not hostile.” Although the primary goal of the regulation, i.e. fair consideration to minority shareholders, is protected, in recent years the takeover procedure has again evolved into just another legal formality before commencing a squeeze-out.

There is no magic formula to improving the status of capital markets in the western Balkans. Marija Tešić says: “It would be encouraging if we saw not only public takeovers and delistings from the domestic exchanges, but also smaller companies and successful start-ups considering listing as a way to raise capital for growth”.


Marija Tešić
Marija Tešić
Saša Sodja
Saša Sodja
Local Partner

Interview with

Marija Tešić

Marija Tešić

Partner, Belgrade

Saša Sodja

Saša Sodja

Attorney-at-Law, Ljubljana