Apollo Bucuresti attempts the first hostile takeover in Romania

Romanian company Apollo Bucuresti is trying to take over Ciorapi Timisoara company, a variant the management of the Timisoara-based company does not agree with and opposes by all means. In a bid to prevent the hostile takeover, Ciorapi Timisoara managers summoned shareholders to vote, pledging to pay dividends for year 1997, which were due at the end of last week, so that they should approve the company’s splitting.

Apollo Bucuresti, one of the few companies that are capitalised through the capital market, has voiced plans to take over from SOF the stake of 24 percent in stock of Ciorapi Timisoara. Apollo’s interest in Ciorapi Timisoara determined a strong reaction from the part of the Timisoara-based company’s managers, in a bid to retain their positions.

“The management of Ciorapi Timisoara is using an old and outdated system in this fight, not according to the rules of the market,” Andrea Cattaneo Della Volta, chairman of Apollo Bucuresti, told Ziarul Financiar. “The lack of transparency the company of Timisoara has manifested, by not communicating its latest financial situations to the Stock Exchange, led to its suspension from trading,” he added. He says that the lack of high performances of Ciorapi Timisoara management will determine many of its small shareholders to sell their stock. The general extraordinary assembly of the company’s shareholders, convened at the end of last week, mandated the Management Board to draw up the project for the splitting of the company. The favourable vote was given by the company’s Employees Association Programme (PAS), led by the company’s managers, and by other small shareholders drawn by the company’s management pledge to pay dividends on year 1997.

The management of Ciorapi Timisoara wants to divide the company, by granting stock to PAS and employees of the plant in Timisoara, and by giving to SOF, in exchange for its stake, the production unit in Sanicolaul Mare that stopped functioning two years ago.

“Our splitting plan is legal,” says Ioan apaiuc, the chairman of Ciorapi Timisoara Management Board. This could lead to a drop in the value of the stake held by SOF, which might oppose the splitting plan. “The constitutive act of the new company, which would result following division, must be signed by the representatives of the State Ownership Fund, otherwise the company’s splitting would not be legal and can be easily contested in court,” a lawyer of the Bucharest Bar, who wanted to remain anonymous, told Ziarul Financiar.