Kruk gives in to V&W's hostile bid

Men's clothier Vistula & Wólczanka (V&W) succeeded in its bid to buy a 66-percent stake in W.Kruk last week. The victory came after weeks of acrimonious struggle with the jeweller's founding family.

The Kruk family, which owned some 28 percent of W.Kruk before the buyout, had originally opposed the merger, saying the offer price was too low.

After V&W countered, by raising its bid by 3.3 percent to zł.24.50 per share, the family said that it would continue to fight against the transaction. Several days later, however, it dropped its opposition. "Not seeing the possibility to continue cooperation as W.Kruk's strategic shareholder, I have decided, with my family, to answer the tender," family member and supervisory board president Wojciech Kruk said in a statement.

Since the takeover bid was launched in early May, Kruk had been working with potential investors to find a way to block the bid, and had even proposed that the June shareholders' meeting authorize a share buyback.

"If Kruk has decided to accept the offer, it means his attempts to defend the company have failed," an asset manager at a fund that holds a significant stake in the jeweler told Reuters. The source wished to remain anonymous.

Commenting on the takeover, Marek Dietl, an economy expert with the Sobieski Institute said, "Generally the market is very competitive. Fortunately it's still growing. However, firms should concentrate on increasing margins, and not on the battle for market share. There is a risk of a price war if growth dynamics begin to fall.

"If the market is very competitive, then one of the ways to limit fighting among firms is to reduce their number," he added.