The Croatian-owned retailer Mercator has withdrawn from the contract to take over rival Slovenian grocer Engrotuš, which operates Tuš stores, after failing to obtain regulatory approval.

The key conditions of the contract will unfortunately not be fulfilled, "so we have taken the decision to withdraw from the contract", Mercator said on 18 November, juts over a year after signing the contract.

"The shareholders of Engrotuš remain committed to the long-term development and successful operation of the company, while further activities will also focus on finding opportunities to sell the company to more serious buyers," Tuš Holding said.

The value of the takeover contract has never been disclosed but unofficially Mercator's Croatian owner Fortenova offered to pay €30 million for Engrotuš, outbidding the German supermarket chain Rewe.

A year after the signing, the deadline for extending the exclusivity period of the contract expired on 15 November.

"The sellers have fulfilled their contractual commitments and the suspensive conditions necessary for the closing of the transaction on time, but the buyer has not been able to obtain the approval from the competent competition watchdog, and has therefore notified the sellers of its withdrawal from the contract instead of unilaterally extending the deadline," wrote Andraž Tuš, CEO of Tuš Holding.

Mercator sought regulatory approval from the Slovenian Competition Protection Agency, but the agency was then reported to have referred the application to the European Commission, which then referred it back to the agency.

Fortenova Group again informed the Competition Protection Agency of the takeover at the end of August, but has so far failed to obtain clearance.

According to the business portal Finance, Mercator had to make a security deposit of €5 million to the sellers of Engrotuš. Had they wanted to extend the contract beyond the expiry date would cost them an additional €3 million.

Tuš Holding expressed concern that Mercator had obtained key information about Engrotuš's business during the due diligence process and during the transaction, which could potentially be used by Mercator as Engrotuš's rival. "We will therefore monitor their activities and, if necessary, initiate appropriate procedures to protect Engrotuš," Tuš Holding said.

Mercator is the biggest grocer in Slovenia, holding roughly 25% of the market and operating some 460 shops, while Engrotuš is the fifth biggest retailer with a 10% market share and about 260 stores.