Bulgarian regulator suspends Zahar Invest buyout bid for Zaharni Zavodi

The proposal contains several inconsistencies and deficiencies which need to be addressed, the financial regulator said in a decision published on Tuesday.

During valuation, unrealistically low estimated revenues and profits were used, leading to reduced net flows and a lower bid price, which negatively impacts minority shareholders targeted by the offer, the FSC said. The estimates do not align with historical data indicating revenue growth and the current trend of high demand, price increases and declining supply in the sugar sector.

Zahar Invest should also clearly state its intentions regarding the status of Zaharni Zavodi following the deal, as it previously said it would request the delisting of the target company from the FSC register.

Additionally, the tender offer should include the highest price per share paid in the last six months or explicitly state if no transactions were made during that period.

Zahar Invest, which currently holds some 10.45 million shares in Zaharni Zavodi, representing a 94.071% stake, submitted an offer in June to buy the remaining 5.929% stake at 5.15 levs ($2.96/2.63 euro) apiece.

With the deal, Zahar Invest aims to enhance Zaharni Zavodi’s competitive position in existing markets and expand into new ones, while ensuring more efficient management through integrated management systems, the bidder said earlier. The company’s strategy is also focused on improving profitability through cost reduction, adopting energy-efficient and automated technologies and optimising asset utilisation.

As of 1345 CET on Wednesday, shares in Zaharni Zavodi traded 18% higher at 5.90 levs on the BaSE market of the Bulgarian Stock Exchange.

(1 euro = 1.95583 levs)