PRI VATIZATION Business English 1, 2009/2010 PE 6, Team STARS: Ela Kurić, Tea Lazić, Ana Leko, Maja Levaj, Marija Lončar, Maja Levaj, Marija Lončar, Gabrijela Lovrić, Iris Lovrić

PRI VATIZATION Agenda: privatization in general privatization in general world’s largest privatizations world’s largest privatizations privatization in Croatia privatization in Croatia

WHAT IS PRIVATIZATION? transfering ownership from the public sector to the private sector transfering ownership from the public sector to the private sector a worldwide phenomenon a worldwide phenomenon strong spread of the privatization movement in the last decade of 20th century strong spread of the privatization movement in the last decade of 20th century different views of privatization: different views of privatization: Milton Friedman - arguments pro privatization Milton Friedman - arguments pro privatization Maude Barlow Maude Barlow Noam Chomsky Noam Chomsky PRIVATIZATION arguments contra privatization

THE WORLD’S LARGEST PRIVATISATIONS (1) telecommunications, power and transport telecommunications, power and transport 1980s  worldwide 1980s  worldwide  coal, railways and nuclear energy  coal, railways and nuclear energy 1990s  Eastern Europe 1990s  Eastern Europe 1990 – 2000  50% in Latin America 1990 – 2000  50% in Latin America  25% in East Asia and the  25% in East Asia and the Pacific Pacific PRIVATIZATION

THE WORLD’S LARGEST PRIVATISATIONS (2) Britain Britain o British Telecom o British Gas→ largest public share offerings o British Rail France France o France Telecom o Air France - partially Japan Japan o Japan Post - the largest privatisation in history PRIVATIZATION

HOW DOES PRIVATIZATION EFFECT A COMPANY’S SHAREHOLDERS? process: process: o private group makes an offer for shares o majority accept –sold o obstacles- getting the acceptance benefit: private group offers a substantial premium compared to the current market value benefit: private group offers a substantial premium compared to the current market value example: example: o Toys "R“ Us o paid $26.75 per share o stock's closing price on New York Stock Exchange $12.02 PRIVATIZATION

PRIVATIZATION IN CROATIA set up in 1991 set up in 1991 controlled by the State Agency for Privatization controlled by the State Agency for Privatization today controlled by Croatian Privatization Fund today controlled by Croatian Privatization Fund 2800 enterprises from all sectors entered the process 2800 enterprises from all sectors entered the process the largest infrastructural companies (oil, railways, telecom etc.) declared public companies the largest infrastructural companies (oil, railways, telecom etc.) declared public companies PRIVATIZATION

PRIVATIZATION OF HAJDUK Kerum, Tommy, Brodomerkur, Studenac, Jolly, Konstruktor - 43 million kunas Kerum, Tommy, Brodomerkur, Studenac, Jolly, Konstruktor - 43 million kunas in September 2009 in September 2009 majority owner: the City of Split majority owner: the City of Split PRIVATIZATION

PRIVATIZATION OF INA contract with MOL contract with MOL 2 phases of privatization: 2 phases of privatization: 1. phase  15% shares on the marketplace 1. phase  15% shares on the marketplace  7% shares to workers  7% shares to workers 2. phase  7.5% shares to citizens 2. phase  7.5% shares to citizens  7.5% shares to workers  7.5% shares to workers Zagreb and London Marketplace Zagreb and London Marketplace amending the law of privatization amending the law of privatization PRIVATIZATION

PRIVATIZATION OF CROATIAN BANKS banks in former Yugoslavia were established by the companies in public sector banks in former Yugoslavia were established by the companies in public sector the fall of socialism  capital of banks given to the companies the fall of socialism  capital of banks given to the companies banks privatized indirectly banks privatized indirectly Privredna banka Zagreb d.d. Privredna banka Zagreb d.d. Splitska banka Splitska banka Riječka banka Riječka banka Zagrebačka banka Zagrebačka banka PRIVATIZATION

SOURCES: PRIVATIZATION