Pursuant to relevant legislation, the company Poslovni sistem Mercator, d.d., hereby informs the shareholders and the public of the following:


On May 5th 2010, company Mercator, d.d., and the company Merfin, d.o.o., the majority shareholder of the company Merkur, signed a letter of intent for strategic combination between the trade division of Merkur and Mercator Group. Such combination would make Mercator Group the leading hardware and electronics retailer in the entire Southeastern European region. Combined with the position of leading FMCG retailer, this would secure a long-term development potential for the largest trade group in the entire Southeastern European region and allow successful pursuit of the Group's goal: to provide high-quality trade services and favorable offer for all consumers in all markets.

The letter of intent only includes a strategic alliance between Mercator and Merkur division, a part of the Merkur Group. Merkur division is conducting its operations in 43 trade centers in four countries (30 in Slovenia and 13 abroad) and 20 franchise stores (18 in Slovenia and two abroad). The division's key trademarks are "MERKURDOM" (Merkur home) and "MERKURMOJSTER" (Merkur D.I.Y.). If the strategic alliance is concluded, it is Mercator's intent to retain all trademarks and brands of the MERKUR division as these are powerful and well established brands recognized by consumers in all markets where they are present.

Hardware and electronics has already become Mercator Group's second most important trade program. With a total of 117 hardware and electronics stores in three markets (Slovenia, Croatia, Serbia), operating as at the end of 2009, this program generated approximately 10 percent of trade revenues at the Group level. In case of strategic alliance, Mercator Group would transfer the entire operations of hardware and electronics program to "MERKUR" brands in order to reap the business synergies and provide high-quality and affordable hardware and electronics offer to customers throughout the region of Southeastern Europe.

Currently, Mercator Group is the leading food, or FMCG, retailer in the region of Southeastern Europe. A strategic alliance with Merkur trade division would also make Mercator the leading hardware and electronics retailer in this region. Such combination of strong market positions in both segments would enable the Group to reap its long-term development potential of the largest trade group in the Southeastern European region, and to offer its customers high-quality trade services and affordable prices in all markets of its operations. This would also be in line with Mercator Group's strategic policy of developing another trade program in addition to the alimentary program in order to provide an additional development potential and an opportunity to reap positive business synergies in all markets of the Group's operations.

As a result of such strategic alliance, the company Mercator, d. d., would become a 100-percent shareholder of the company Merkur, d. d. The latter, however, would previously be restructured in such way that it would comprise, along with its subsidiaries in foreign markets, only assets and liabilities of the Merkur division, while any other assets and liabilities would be eliminated. Were the strategic alliance effected, the purchase price paid by Mercator would also include up to 10 percent of newly issued shares of the company Mercator, d.d., which would be, following an approval by the company Supervisory Board, issued from approved capital in compliance with the statutory provisions (provisions in Articles of Association and Bylaws) of the company Mercator, d.d. Based on the non-binding letter of intent, Mercator will commence the processes of compiling a due diligence report including business, legal, financial, and taxation aspects of the Merkur trade division; these processes are scheduled for completion by the end of June 2010. In addition, such transaction, if effected, would most likely be subject to appraisal by the Competition Protection Office of the Republic of Slovenia.


This announcement will be published on the company’s website at www.mercator.si as of May 6th 2010, and will remain posted for a period of at least five years.