The market reacted yesterday to the weekend’s news with a share price decrease of 31.43%.
On Saturday (23 November 2019), Mesna Industrija Pivac published an announcement on their website stating that they have signed a Sale and Transfer Agreement with Kraš ESOP, through which they acquired an additional 18.45% stake in Kraš.
The market reacted yesterday to such news, resulting in a share price decrease of 31.43% (on a turnover of HRK 2.6m), with it closing at HRK 720 per share. Such a decrease could have been expected since after the mentioned acquisition MI Pivac obtained a majority voting stake in the company (MI Pivac has a 49.16% stake in Kraš and 51.8 % of voting rights due to 5.1% of shares in treasury). Such a large shareholding supposedly reduced the interest of other buyers to aggressively bid on the market.
Namely, it appears that Kappa Star Limited (which has been acquiring large volumes of Kraš for quite some time), removed their bid from the market, or at least at levels we have seen in the past weeks. Before the Friday’s market close, Kraš’ order book had the first bid on HRK 1050 per share for a volume of roughly 40,000 shares. After the weekend’s development such levels were not present on the market which consequently led to such a steep share price decrease. As a reminder, Kappa Star Limited is currently the 2nd largest shareholder of Kraš owning 25.82%.
Kraš YTD Share Price Performance
As stated in our yesterday’s flash news, MI Pivac, Kraš ESOP and Sindikat PPDIV also signed the Agreement on social partnership, through which additional obligations of Pivac were defined (such as: confirming their further investment in development of Kraš, the continuation of respect and protection on the level of employee rights and maintaining production facilities at the existing locations).
According to the media, with the above-mentioned agreement MI Pivac obliged themselves not to cut salaries for the next 10 years. This seems to be the crucial reasons for the sale and transfer agreement between MI Pivac and KRAŠ ESOP, as ESOP is represented by the workers of Kraš. The media further states that Kappa Star Limited allegedly offered HRK 869 per share to Kraš ESOP, however without the mentioned wage safety of the workers. Therefore, it would be left unknown whether Kappa Star Limited would want to cut wages or reduce the head-count.
