The two retailers have agreed on the way to integrate their operations, with Flanco to become one of Flamingo''s units.
The deal had been announced at the beginning of last December, and the target was the creation of a holding with a higher level of profitability and financial power.
The complex deal, amounting to 37m euros, in the first stage includes a capital increase in the case of Flamingo, through contributions in cash, with the money raised to be used for the acquisition of Flanco. In the deal, Flanco shareholders will contribute 25-27m euros to the capital increase and will thus become Flamingo shareholders.
Technically, Flanco shareholders will sell the company for a stake in Flamingo plus a certain amount of money, as it had been announced last December. The transaction process has been changed, though, allowing Flamingo''s minority shareholders to have a pre-emption right in the capital increase. The increase will be made through contributions in cash and Flamingo plans to issue 316.9 million new shares at a price of 0.437 RON/share. The value of the share offering will come to about 38 million euros. The company''s current capital is worth 14.2 million euros.
"This will be an acquisition in cash. We will conduct a capital increase that will address all Flamingo shareholders. We intend to convene a General Meeting of Shareholders to endorse this operation in a week. We had planned an acquisition through contributions in kind, but we needed a quorum within the meeting - not only 75% of stock, but also 75% of the shareholders. Considering the number of shareholders has increased from 1,200 investors to 1,500, we realised that we cannot meet the conditions for achieving the necessary quorum," Dragos Simion, Flamingo International vice-president, told Ziarul Financiar. The management of Flamingo had come under fire, when the transaction was announced, because it did not intend to grant preference rights and, consequently, the stakes held by the company''s shareholders, including those who had bought stock on the Stock Exchange, were going to be diluted.
Flanco shareholders cannot directly contribute to the capital increase because they are not Flamingo shareholders, but they have pledged to buy the necessary preference rights from the market so as to be able to meet their obligations.
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