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INI-481/16

MERCATOR, d.d., Ljubljana

MERCATOR SIGNS AN AGREEMENT TO DIVEST MODIANA

 

The new owner believes Modiana has potential at its existing locations, and even more so in expansion to strategic shopping centres in the region.

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

 

Poslovni sistem Mercator, d.d., and its subsidiaries in the markets of Croatia, Serbia, and Bosnia and Herzegovina, signed today an agreement with the company Montecristo SL, d.o.o., to divest Modiana. The sale and purchase agreement includes both apparel stores and drug stores. The signing of the agreement is an important strategic step in Modiana's development in the next few years, as the entry of the new owner and extra capital support open up new development opportunities.

Toni Balažič, President of the Management Board at Mercator, d.d., stressed upon the signing of the sale and purchase agreement: »By focusing on its core activity, Mercator is successfully pursuing the strategic goals laid down in 2012. When divesting its non-core activities, Mercator insists on finding strategic partners who will take over the operations and the employees and whose primary concern is further and long-term development. In this case, as with all other successfully completed divestment processes, the new owner will continue to pursue and develop Modiana's vision of becoming the region's largest fashion provider. Results of the pursuit of the strategy thus point out that we are on the right path to long-term development of Slovenia's largest retailer.«

Goran Kristan, director of Montecristo SL, commented upon the occasion: »I am pleased that we have successfully concluded the sale and purchase agreement for Modiana. Our plans are ambitious, development-oriented, and they open up new opportunities in textile product trade. I believe Modiana has great potential at its existing locations and even greater potential if it pursues expansion to strategic shopping centres in the region. The basic goal is of course to retain Modiana's current customers. The refurbishment and expansion of brand portfolio, however, are also aimed at winning over new customer segments. Our interest therefore is long-term development of the store network, employees, and brands tailored to the end buyer.«

Goran Kristan has over 20 years of experience in textile product trade. He was the CFO at Sportina Bled for over 15 years, and he was the executive director for Southeastern Europe at Tom Tailor Group AG, Germany, for six years, in which Southeastern Europe became Tom Tailor Group's most successful region. He joined Sportina in 1995 when it operated 7 stores, and he took part in its development into a corporate group with over 250 shops. In the last six years, he has developed the operations in the region from the initial 23 to over 120 own shops and a wide wholesale network. After years of international experience in managing apparel stores, Goran Kristan teamed up with the partner Montecristo Holding and advisors of the Albacore consultancy and decided to acquire Modiana.

The company Montecristo Holding is a subsidiary of EMKAY Industries Hong Kong, founded in 1974 and specializing in textile sales since 1988. It currently employs 45 people. It is headquartered in Hong Kong and operates offices in Bangladesh and in China.

In Europe, the company operates as Montecristo Cyprus holding company, with a subsidiary Montecristo Romania, managing 3 brands: Lee Cooper, Kenvelo, and Time Out.

It is Montecristo's strategic policy to become a vertically oriented trader with the strongest presence in Southeastern Europe.

The new owner shall take over all Modiana employees, and the agreement with Mercator includes takeover of operations at all locations, including the purchase of fixed assets, i.e. equipment. The business priorities shall continue to include updates or modernization of operations, development in human resource management, and attainment of higher profit margins. Currently existing Modiana stores will remain at their present locations. The brand portfolio will be partly revised and extended, and private labels will be developed to allow pricing attuned to the needs of modern customers.

Modiana was founded in 1964 as Modna hiša Maribor. Today, it is one of the major providers of fashion apparel in Slovenia, with some shops in other markets of the region as well. Modiana's offer of textile products is rounded off with numerous Beautique drug stores. Modiana operates 47 shops in Slovenia, 22 in Croatia, and 13 in each Bosnia and Herzegovina, and Serbia.

The completion of the transaction is subject to a few formal procedures, including the issue of approvals by respective regulators. The transaction is expected to be completed in the last quarter of 2016.

 

 

This announcement will be published on the company’s website at www.mercatorgroup.si as of July 14, 2016, and will remain posted for a period of at least five years.

Poslovni sistem Mercator, d.d.,
Management Board
Date: 14.07.2016