Croatia's Pliva Takes Majority Stake In Polfa Krakow

Pliva, the Croatian drugs group, has initiated its strategy of expansion(Marketletter October 6) by acquiring a majority stake in Polish company Krakowskie Zaklady Farmaceutyczyne Polfa, the country's third-largest drug producer, which reported net profits of $9.2 million last year. Having taken a stake of 60% at a cost of $85.7 million, Pliva will also pay an extra $14.3 million to raise its holding to 70% within a month.

The Croatian company intends to inject a further $38 million in new equity capital into Polfa Krakow by the end of 1998, raising its stake to 91.5%. Having identified central and east Europe as its main target for future growth, Pliva says that the acquisition gives it a manufacturing base inside the Central European Free Trade Agreement, and later, when Poland is granted full membership status, a foothold in the European Union. Pliva, the first central European industrial company to gain a listing on the London Stock Exchange, is planning further acquisitions in the region. Meantime, the Croatian government has announced plans to sell a stake of up to 14.16% in Pliva, valued at some $280 million, in a share offering in November.

- US-based group ICN has confirmed that it has acquired 80% of Polfa Rzeszow (Marketletter September 22). ICN is paying $33.7 million for the company, which last year had sales of $40 million, as well as agreeing to invest $20 million in a new drug manufacturing plant over the next two years, at which time ICN will own approximately 90% of the group. It is the seventh state-owned company in central Europe to be privatized and acquired by ICN, making it the largest pharmaceutical company in the region.