On Monday Divac announced to reporters his intention to invest around €100 million in the company over a two year period in return for a 51 per cent controlling stake. The deal would mean accumulating outstanding shares in the company from smaller investors.
With leading drinks manufacturers from the region and French giant Danone all in the bidding, Divac is up against stiff competition. However, press reports suggest that his bid is being looked upon favourably by the company, with SeeNews reporting that a letter of intent has already been signed to secure the deal.
A spokesman for Knjaz Milos refused to comment on the star's bid, stating that ultimately it would be the Serbian Securities and and Exchange Commission who would decide on the successful bid. A September 6 deadline to secure a firm bid has already been missed and it is now thought that a final decision will not be made for another two months.
The other three bidders include Cayman Islands-registered FPP Balkan, Hungarian-based Jaminca - part of the Agrokor group - and Slovenian beer producer Lasko.
With sales of around €70 million in 2003, Knjaz Milos is currently the market leader for bottled water in Serbia thanks to strong brands such as Knjaz Milos and Aqua Viva. The company has also developed a firm export market for its products to countries such as Sweden, Hungary, Canada, Germany, Russia, Australia and Switzerland.
Until Divac placed his offer, bidding is understood to have been between CSD9,000 (€120) and CSD10,000 per share for as many as 350,000 shares. Top bids from the main four rivals to Divac's bid have so far reached €60 million for a 40 per cent share in the company.
Industry observers say that the sums being offered for the company reflect a growing confidence in the Serbian economy by investors. Although it is clear that Knjaz Milos appears as a sound investment, Divac said that the reason he wanted to invest in the company is because Serbia is where he wants his children to grow up.
Serbia suffered greatly during the war in former Yugoslavia and major investors have tended to shy away from firm commitments there, until now.
Nadia Patkova, who analyses the agro-food sector for the European Bank for Reconstruction and Development, says that witht the recent growth in the Serbian economy it is little wonder that there is so much interest in the country's leading mineral water bottler.
"Since 2001 Serbian GDP has been continuing to grow at 20 per cent," said Patkova. "What has particularly impacted the economy is the fact that many of the businesses are now being privatised, which is making them much more efficient and a better prospect for investors."