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The government of Croatia decided on Wednesday to sell a part of its stake in the country's biggest insurer Croatia Osiguranje (CO) to local tobacco group Adris, officials said.
Adris offered 119 million euros ($163 million) for the 39.6 percent stake, or 970.45 euros per share, beating a rival bid of 800 euros per share by Polish state insurer PZU.
Adris, one of the largest tobacco companies in the Balkans and which is also involved in tourism, has pledged to invest an additional 110 million in the company.
"We have found a good partner and additional finances to expand CO in Croatia and the region," Finance Minister Slavko Linic told reporters after the government session.
Although Adris will now have a controlling stake in the company, the government will keep 28 percent of the insurer after the capital increase.
Croatia, which became the EU newest member in July, has been struggling to trim its budget deficit.
It has also offered its loss-making national air carrier Croatia Airlines for sale, but it attracted no bidders.
Croatia's economy, which is highly dependent on tourism, has failed to post any growth since 2009.
The European Commission warned Croatia last week it was in breach of rules on the public deficit and debt, placing its finances under tighter EU supervision.