Advent wins out in eastern European deal tussle

Mid Europa has missed out in the battle to acquire Polish supermarket operator EKO after Advent International announced it had this week acquired 59% of the business.

Advent first bid 4.1 zloty ($1.3) per share for EKO Holding Group in early September while it was in negotiations with the company’s founder Krzysztof Gradecki, who held a majority stake in the company together with his wife.

After hearing of central and eastern European firm Mid Europa’s interest in the business, Advent upped its bid to 4.7 zloty a few weeks later and reached an agreement with Gradecki but Mid Europa came in with a counter offer of 5.5 zloty.

Advent last week increased its bid again to 5.6 zloty only for Mid Europa to increase its offer to between 5.8 and 6.35 depending on developments.

But Advent succeeded in acquiring the majority of the shares this week, giving it control of the investment.

Bidding wars are extremely rare in private equity, as firms tend to avoid processes where they may be forced to pay an inflated price.

It is unclear whether Mid Europa’s higher tender offer will remain. Buyout firms tend to only seek control positions, unlike hedge funds which often acquire minority stakes. Mid Europa had expressed interest in the business in local press reports as it owns another Polish supermarket chain Zabka.

Advent, which did not use debt for the deal, is treating the acquisition as a turnaround investment and plans to offload the company’s non-core assets.

Paweł Ryszkiewicz, a director at Advent, said: “EKO needs to focus on driving the scale and capability of its core supermarket business. It is therefore Advent’s strategy to simplify the company’s structure, dispose of non-core assets and to ensure that the management’s full attention and the company’s resources are dedicated to competing in this extremely challenging market.”

It is the latest take-private deal by Advent, which is also in the process of buying German high street retailer Douglas Holding for €1.5 billion.