Two bidders have dropped out of the race for Serbian drinks firm Knjaz Milos. French food company Danone and Slovenian brewer Pivovarna Lasko withdrew their bids yesterday (6 December). The move leaves UK-based fund FPP Balkan as the lone contender.

Danone and Lasko pulled out of the long-running and highly controversial bidding war citing legal issues that made for an uncertain investment climate in Serbia.

"Danone only takes part in privatisations where the investment will be safe and where all participants want to accept Danone as an investor," Slavko Caric, Danone's representative in Serbia, told reporters.

Caric also referred to recent changes in legislation that meant any majority shareholder needs smaller shareholders to agree on every decision.

"The new law on enterprises changes rules on future transfer of shares and future management of the company," Caric said.

The Serbian Securities Commission said FPP Balkan Ltd had submitted the only offer for a stake of between 25% and 34% of Knjaz at the price of 23,000 dinars (US$396) per share. The offer applies only to the shares of small stakeholders, leaving Serbia's cash-strapped government empty-handed.

FPP already holds 25% of Knjaz and only targeted the stakes of small shareholders all along, tempting them with a bid price that was almost 30% higher than Danone's. FPP says it will buy the state's shares later at the same price.