Domestic venture firm Arago's public bid of HUF4270 (US$) a share for the all outstanding stock in Hungary's largest meat processor Pick has been approved today [Tuesday] by the country's capital market regulator, PSZAF.

The offer, managed by Hungarian brokerage Concorde Securities, is considerable higher than Arago's previous bid, of HUF3770 per share, but PSZAF declined to approve this last month.

PSZAF also revealed today that its investigations into Arago's possible manipulation of Pick's share price prior to the venture firm's earlier public bid, made on 2 October, have been closed. The regulator has "brought no measures as a result of the facts the investigation unveiled".

The bid is valid from 7 December to 7 January 2002, and following its approval, trade in Pick shares may resume later today. Arago is currently Pick's largest shareholder, controlling a 41.3% stake.

Pick has meanwhile posted a higher than expected net profit of HUF699.5m for the first nine months of 2001; a 25% drop year-on-year but a considerable surprise for the market watchers expecting a negative bottom line.

Hungarian meat processor Pick has been buffeted this year by unfavourable conditions in the meat market. Domestic hog prices have continued to rise, remaining higher than average EU prices since the middle of June this year.

Animal health issues have damaged export sales, and the company reported losses of HUF337m (US$1.2m) from lower export subsidies. The price of the company's shares dropped by 62% during the first nine months of 2001, and in August the firm issued a profit warning for Q3 claiming that operating losses exceeded HUF200m in July.
 
Profitability improved however after price increases were implemented in September, and the company successfully integrated meat processor Falcotrade.

Pick's domestic sales increased 12% to HUF18.5bn, however the company notes that this is due to an increase in average sales prices; sales were down in volume terms.

At a group level, consolidated exports reached HUF23.2bn for the period, 31% higher year-on-year, and the direct cost of sales increased by 38%, to HUF42.4bn. The group's operating profit decreased 74%.