Salford to sell brands in Serbia prior to 2012 - strategic investors find Imlek and Subotica Dairy most interesting

- After it missed the optimal deadline for leaving Serbian market in 2008 and in 2009, Investment fund Salford plans to sell companies Bambi Banat, Knjaz Miloš, Subotica Dairy and Imlek prior to 2012 at the latest - the CEO of Salford for Serbia, Slobodan Petrović, said in the interview for eKapija. He added that Salford did not plan to do any new acquisition before leaving the market and pointed out that, after that, reinvesting can be expected in the companies in both our country and the region.

- Salford discontinued the process of withdrawal from Serbian market, that is, the sale of its shares in the companies in Serbia, because of the crisis. We started the sale of Knjaz Miloš in 2008, but potential buyers gave up the acquisition due to bad financial situation at global level. Then we also stopped other processes and postponed the sale for year 2010 or 2011, which will primarily depend on the results in this year - Petrović said in the interview he gave during the Business Forum on Kopaonik.

He said that the Fund was maintaining contacts with potential buyers, but that there would be no concrete negotiations until some better business results were achieved. Although everybody expected that Knjaz Miloš would be the first on the list of companies that would "leave" Salford, that did not happen.

- The profit that our companies currently make is smaller than before the crisis. It may happen to us to lose some money when selling certain companies. For example, Knjaz Miloš cost us about 150m EUR to the date. Its purchase price was about 90m EUR, while the rest was spent on investments. We may not be able to earn that money back. So far, we have been contacted by funds from Italy, Austria, Carlsberg, the owner of Dobra Voda from Czech Republic, etc. We have negotiated with total of 11 bidders and all the negotiations have been unsuccessful.

Dairy industry is the most interesting

When asked which companies are expected to draw the biggest interest of investors, Petrović answered that it was difficult to foresee.

- When it comes to sectors, I assume that the dairy industry will be the most interesting because it has always been drawing the biggest interest of strategic investors. We bought five dairies in Serbia and four of them have been merged into one - Imlek. That company is also the owner of the dairy in Macedonia, as well as Salford's dairies in Bosnia and Montenegro. We also have Subotica Dairy in our possession as a separate juristic person - said Petrović and added that he can not currently see the possibility for some small dairy to merge with Imlek.

Reinvesting

After leaving the market, Salford plans to reinvest in the companies in Serbia, but Petrović said that it was still too early to speak about concrete plans.

- We still don't know either how much or in which companies to invest because we don't know what the results of the sale of existing companies will be. We will then negotiate again with investors to see how much they want to reinvest and in what. The interest exists from before because Salford was achieving relatively good business results in the Balkans. We selected excellent brands in Serbia and I think that we restructured them well. A significant amount of money is invested and certain return is expected.

Petrović explained that Salford primarily invested in the countries in transition. As he explained, the risks are significantly higher, but so are returns.

- We will probably repeat the scenario similar to this one in Serbia in Macedonia and in Bosnia and Herzegovina and I think that the chances for investments are still big because there are many interesting companies. Salford proved it is good not only at buying companies, but also at restructuring them, which is, actually, a much more difficult thing to do. Many investors bought companies during the privatization process in Serbia and failed to do what Salford did - Petrović concluded.

T.S