PRIVATIZATION

Business English 1, 2009/2010Business English 1, 2009/2010

PE 6, Team STARS:PE 6, Team STARS:Ela Kurić, Tea Lazić, Ana Leko,Ela Kurić, Tea Lazić, Ana Leko,

Maja Levaj, Marija Lončar, Maja Levaj, Marija Lončar,

Gabrijela Lovrić, Iris LovrićGabrijela Lovrić, Iris Lovrić

PRIVATIZATION

Agenda:Agenda: privatization in generalprivatization in general world’s largest privatizationsworld’s largest privatizations privatization in Croatiaprivatization in Croatia

WHAT IS PRIVATIZATION?WHAT IS PRIVATIZATION?

transfering ownership from the public transfering ownership from the public sector to the private sectorsector to the private sector

a worldwide phenomenona worldwide phenomenon strong spread of the privatization strong spread of the privatization

movement in the last decade of 20th movement in the last decade of 20th centurycentury

different views of privatization:different views of privatization: Milton Friedman - Milton Friedman - arguments pro privatizationarguments pro privatization

Maude BarlowMaude Barlow Noam ChomskyNoam Chomsky

PRIVATIZATION

arguments contra privatizationarguments contra privatization

THE WORLD’S LARGEST THE WORLD’S LARGEST PRIVATISATIONS (1)PRIVATISATIONS (1)

telecommunications, power and transport telecommunications, power and transport 1980s 1980s worldwide worldwide 1994 - 1997 1994 - 1997 coal, railways and nuclear coal, railways and nuclear

energy energy 1990s 1990s Eastern Europe Eastern Europe 1990 – 2000 1990 – 2000 50% in Latin America 50% in Latin America

25% in25% in East Asia and theEast Asia and the

PacificPacific

PRIVATIZATION

THE WORLD’S LARGEST THE WORLD’S LARGEST PRIVATISATIONS (2)PRIVATISATIONS (2)

Britain Britain o British TelecomBritish Telecomo British GasBritish Gas→ → largest public share offeringslargest public share offerings o British RailBritish Rail

FranceFranceo France TelecomFrance Telecomo Air France - partiallyAir France - partially

JapanJapano Japan Post - tJapan Post - the largest privatisation in historyhe largest privatisation in history

PRIVATIZATION

HOW DOES PRIVATIZATION HOW DOES PRIVATIZATION EFFECT A COMPANY’S EFFECT A COMPANY’S

SHAREHOLDERS?SHAREHOLDERS? process:process:

o private group makes an offer for sharesprivate group makes an offer for shareso majority accept –soldmajority accept –soldo obstacles- getting the acceptanceobstacles- getting the acceptance

benefit: private group offers a substantial premium benefit: private group offers a substantial premium compared to the current market valuecompared to the current market value

example: example: o Toys "R“ Us Toys "R“ Us o paid $26.75 per sharepaid $26.75 per shareo stock's closing price on New York stock's closing price on New York

Stock Exchange $12.02Stock Exchange $12.02

PRIVATIZATION

PRIVATIZATION IN CROATIAPRIVATIZATION IN CROATIA

set up in 1991set up in 1991 controlled by the State Agency for controlled by the State Agency for

PrivatizationPrivatization today controlled by Croatian Privatization today controlled by Croatian Privatization

Fund Fund 2800 enterprises from all sectors entered 2800 enterprises from all sectors entered

the processthe process the largest infrastructural companies (oil, the largest infrastructural companies (oil,

railways, telecom etc.) declared public railways, telecom etc.) declared public companies companies

PRIVATIZATION

PRIVATIZATION OF HAJDUKPRIVATIZATION OF HAJDUK

Kerum, Tommy, Brodomerkur, Studenac, Kerum, Tommy, Brodomerkur, Studenac, Jolly, Konstruktor - 43 million kunasJolly, Konstruktor - 43 million kunas

in September 2009in September 2009

majority owner: the City of Splitmajority owner: the City of Split

PRIVATIZATION

PRIVATIZATION OF INAPRIVATIZATION OF INA

contract with MOLcontract with MOL 2 phases of privatization:2 phases of privatization: 1. phase 1. phase 15% shares on the marketplace 15% shares on the marketplace

7% shares to workers7% shares to workers 2. phase 2. phase 7.5% shares to citizens 7.5% shares to citizens

7.5% shares to workers7.5% shares to workers Zagreb and London MarketplaceZagreb and London Marketplace amending the law of privatization amending the law of privatization

PRIVATIZATION

PRIVATIZATION OF PRIVATIZATION OF CROATIAN BANKSCROATIAN BANKS

banks in former Yugoslavia were established by banks in former Yugoslavia were established by the companies in public sectorthe companies in public sector

the fall of socialism the fall of socialism capital of banks given to capital of banks given to the companies the companies

banks privatized indirectlybanks privatized indirectly Privredna banka Zagreb d.d.Privredna banka Zagreb d.d. Splitska bankaSplitska banka Riječka bankaRiječka banka Zagrebačka bankaZagrebačka banka

PRIVATIZATION

SOURCES:

www.investopedia.com www.wikipedia.com

PRIVATIZATION