Reactions to Laško Sale Overwhelmingly Positive


Agrarian economist Aleš Kuhar expects the new owner to check all cash flows and seek synergies in integration of Laško's business.

"Expensive and inappropriate suppliers will be ditched. Heineken will put in place its purchasing channels and there will be streamlining of sales."

"Of course sparks will fly, but I think this takeover will be a positive example…The final balance will definitely be positive," Kuhar told the STA.

Given Heineken's announcement, one of the first moves will probably be leveraging spare Laško capacity to bottle other Heineken brands.

"This is good. They are coming here to pump up this investment and start achieving a positive financial result."

While Heienken has said it plans to retain both key beer brands, Laško and Union, Kuhar suspects it may decide to offload water brands and newspaper publisher Delo.

One positive impact of the sale is the discontinuation of "one of the most pervasive negative modes of business in the past decade," he said in reference to the failed management buyout of Laško.

"There are many such stories in Slovenia…This takeover will probably provide a new impetus to start resolving other such cases," he said.

But Kuhar also noted some of the downsides, most notably the fact that Heineken got between two-thirds and 80% of the Slovenian beer market in a single swoop.

This warrants close scrutiny of the new owner's competitive behaviour, he said.

"We have foreign competition in the sense of beer imports and the Laško-Union market share has been decreasing, but a significant chunk of imports are coming from Heineken's other production facilities."

A similar issue was raised by Sašo Polanec, an economist at the Ljubljana Faculty of Economics, who said foreigners were simply handed a monopoly.

However, he was quick to point out that the original sin stems over a decade back, when the anti-trust authorities cleared the Laško acquisition of Pivovarna Union, following a bidding war with Interbrew (now Anheuser-Busch Inbev).

Overall, Polanec expects better governance. "I expect the company to be better run, there will be fewer ownership stories, less theft and similar."

He also pointed out that Heineken was likely to close one of the locations given that Heineken has a brewery in nearby Zagreb, with Laško having two production sites, in Ljubljana and Laško.

"In the long run we cannot expect that all three will remain. If labour costs are higher than in Croatia, I would expect they will shut down the location here first."

The overall purchase agreement has not been disclosed but several media reports suggest Heineken pledged to preserve jobs for a few years and honour all labour contracts.

Andrej Škorja, the head of the Laško in-house trade union, told the STA that Heineken was "the best option" for the workers.

The current Laško strategy already stipulates that Laško and Union will be merged, which will lead to job cuts.

"We are being promised that this will be done with attrition and in a normal time frame, not drastically and quickly."

While stopping short of actually welcoming the sale, economist Jože Mencinger, who is known for his views against privatisation and foreign ownership, said Heineken might not be a bad owner.

He criticised the merger of brewers Union and Laško in the past and their acquisition of fruit drinks maker Fructal and mineral water company Radenska, which he said was unnecessary and harmful.

"Each of these companies could have continued to operate successfully if they stuck to the core business instead of venturing into financial products," the veteran economist said.