In its first year of European Union membership, Bulgaria saw many major shifts in the world of business, as several large foreign consortiums and companies entered the market.

AIG Capital Partners (AIGCP) officially acquired 90 per cent of the country’s main landline telecom Bulgarian Telecommunication Company (BTC) in block deals on the Bulgarian Stock Exchange on August 17.

AIGCP is part of AIG Global Investment Group. In April 2007 AIGCP signed a 1.08 billion euro deal to take over 65 per cent of BTC from Iceland’s investment group Novator. The block transactions that followed formalised the agreement signed earlier. A further 25 per cent of the shares, composed of minority stakes held by Bulgarian and foreign entities indirectly linked to Novator, were transferred.

The block transfers price terms for the 65 per cent stake were booked at two billion leva, and 772.45 million leva for the 25 per cent stake.

The company’s market capitalisation decreased by seven per cent on the day of the block deals, standing at 3.1 billion.

On October 23 the State Financial Commission approved the improved BTC buyout offer. The local subsidiary of AIG Capital Partners, NEF Telecom (NEFT), submitted it to BTC minority shareholders.

The new price NEFT proposed was 11.3 leva a share, which was 5.3 per cent more than the previously offered amount of 10.73 leva. The offer was for 28 663 960 shares.
Bulgarian state fleet Maritime Navibulgare EAD underwent a long privatisation competition procedure in 2007. Finally, on October 12 the state Privatisation Agency (PA) admitted only one company, German consortium KG Maritime Shipping (KGMS), to participate further in the Navibulgare privatisation procedure.

KGMS was competing for the sale of 7 631 460 shares, which was 70 per cent of Varna-based Varna Navibulgare. Chartworld Shipping Corporation of Athens and Essar Shipping&Logistics Limited of Cyprus were the other two participants to submit their documentation for participation in the last stage of the privatisation procedure.

KG Maritime Partners AD (KGMP), Sofia, is a strategic investor and has a 70 per cent shareholder participation in KGMS. Trader Advance Properties OOD holds the remaining 30 per cent of KGMS. Martrade Shipping and Transport GmbH, Duesseldorf has a 99 per cent shareholder participation in KGMP and the ship manager Accord Ship Management Ltd, India, holds the remaining one per cent.

The PA said that one of the advantages of KGMS was that the company was a charter executor and managed more than 100 ships with a tonnage considerably bigger than Navibulgare’s tonnage. The term KGMS has to file its initial offer expired on November 8 2007. However, the term for submitting a commitment offer for Navibulgare purchase was until 3pm on January 9 2008, the PA said.

On March 21, Shell Gas Holdings announced that it had signed an agreement for the sale of its Bulgarian propane-butane business to French company Rubis. The deal also included the sale of its propane-butane business in Czech Republic, Germany, Romania, Spain and Switzerland.

The transaction happened in accordance with Shell’s strategy for “oil extraction and production business expansion and increasing of the winning oil products trade business,” a company media statement said. The rest of the Shell oil products trade business in Bulgaria was not included in the deal and Shell announced that it would retain it. Its activities include wholesale and retail trade in fuels through Shell commercial complexes, oils, wholesale fuel trade, supply and distribution.

Furthermore, on April 27 the State Antitrust Commission (SAC) approved the acquisition of Bulgarian car batteries producer Energia by the Luxembourg-registered Enersys Holdings, part of the US group Enersys. Enersys signed a deal to take over 88 per cent of Energia from two local entities in January 2007 and later on expanded the stake to more than 90 per cent. The acquisition amounted to $17 million. Energia is among the top four largest car battery producers in Bulgaria.

Following this, local retail food chain Familia signed a franchise contract with Ena Markets chain on May 15, according to which Ena now runs 17 of the 26 Familia stores. Familia was owned by Equest, which took it over in 2006, but in December 2007 Equest was reported to be in talks about selling Familia.

In July, Swiss-registered investment group Julius Baer acquired 6.7 per cent of Bulgaria’s largest holding company, Chimimport. This was followed by an increase in the holding’s stock price. Chimimport market capitalisation neared the billion euro benchmark on July 9. The holding has equity participations in 44 local companies.

Later, on September 21, Chimimport acquired two agricultural companies, Bek International and Zarneni Hrani, Valchi Dol, for a total of 32.1 million leva. Chimimport’s grain business includes six other companies and in 2007 was consolidated into a single entity.

In July, Israel-based IT company One1 Software Technologies acquired 66 per cent of its local peer Stanga for $1.75 million. Stanga was established about eight years ago in Sofia and currently employs more than 100 highly qualified specialists. 

On October 4, the SAC approved the acquisition of Eurobet (EB) by Eurofootball (EF). EF organises betting on sports results, while EB works in the field of lotto games. After the acquisition, EF started offering a full range of products and EB expanded the number of points for client servicing.

At the end of July, Pirelli and UniCredit Bulbank (UCB) signed an agreement for the establishment of Pirelli Real Estate Bulgaria. Pirelli started offering its own business model, while simultaneously counting on co-operation with UCB to become a leader on the Bulgarian market. The main purposes of the joint company were to develop regional platforms for asset management and special service platforms, as well as to attract foreign investment capital to co-finance various sectors of the real estate industry. Pirelli received 75 per cent,and UCB 25 per cent of the new company.

On August 3, BNP Paribas acquired Bulgarian consumer credit specialist JetFinance International through its subsidiary Cetelem.

In January, Bulgaria’s financial regulator approved a buyout offer by Luxembourg-registered Eurobank Holding to the minority shareholders of DZI Bank. Eurobank holding, owned by Greece’s Eurobank, bought a total of 74.8 per cent in DZI Bank in two separate transactions in mid-December 2006 and then further increased its stake to 91.3 per cent.

At the beginning of February, one of the leading financial groups in Europe, Belgium’s KBC Group, acquired 70 per cent of Bulgaria’s DZI Insurance and launched a public bid for the remaining shares. KBC paid 185 million euro for the 70 per cent stake, while about 75 million euro, an amount equal to 70 per cent of the undistributed capital gain proceeds received by DZI Insurance for the sale of their stake in DZI Bank, was paid by KBC to Kontract Sofia.

On May 17, DZI and Postbank announced the merger of the two financial institutions. Their information systems operational merger was completed by the end of July and the juridical merger at the end of September 2007.

Creating the biggest financial institution in Bulgaria, the three Bulgarian banks owned by Italy’s UniCredit Group – Bulbank, HVB Biochim and Hebrosbank – merged in the end of April 2007, establishing UniCredit Bulbank.