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Alta Capital poised to take over Kalev chocolate

Sep 26, 2007
By TBT staff

Alta Capital poised to take over Kalev chocolate
KEPT AT HOME: Kalev's long-standing CEO, Oliver Kruuda, stressed that Estonia's premier confectionery will still remain under domestic control after he and other shareholders sold to a local investment firm.
TALLINN - Alta Capital Partners, a venture capital firm, announced that it was purchasing several food-producing subsidiaries of AS Kalev, including the regionally famous chocolate and candy producer.
The Estonia-based Alta Capital said in a statement that it was acquiring stakes in Kalev Paide Tootmine, Kalev Johvi Tootmine, Kalev Chocolate Factory, Vilma and Maiasmokk for 880 million kroons (56 million euros).
The Estonian dairies Tere and Meieri Transport are also slated to be taken over as part of the deal, though the value of this transaction is not being disclosed.

The deal, which was finalized on Sept. 20, must be approved by competition authorities.
Kalev is one of Estonia's 's and the Baltics' 's best known brand names and boasts a long line of popular consumer products. For the ambitious Alta Capital, which recently acquired Rigas Piensaimnieks, Latvia's largest milk producer, the acquisition represents a major step in solidifying its position on the Baltic food market.
In the words of Alta Capital CEO Indrek Rahumaa, "This acquisition complements our portfolio in the Baltic Sea region. There have been many wise investments in the companies, starting from production and ending with marketing, and we are only now beginning to see their returns."
He stressed that Alta Capital's philosophy is "to acquire strong companies with competent teams and to grow the value on a long-term basis."

Long-time Kalev owner Oliver Kruuda, who, along with two other major shareholders, is selling his stakes to Alta Capital, praised the deal.
"I am delighted that our team has successfully managed to keep the local food industry in Estonian hands," he said in a statement. "The new Estonian owners are determined to further develop our respected food industries, relying on our previous experience and ideas."
Kruuda will remain on board the companies' supervisory teams for at least three years. He said AS Kalev in the near future would focus on the mass media, an industry regarded as highly lucrative. "Attentive readers have probably already seen the first developments in the media market and will notice even more of them in the nearer future," Kruuda said.

Rigas Piensaimnieks CEO also welcomed the deal. "The purchase of leading food producing firms… is a very good step for us as part of the Alta Capital Partners structure," Indrek Rahumaa told the Bizness & Baltija daily. "Our Karums curd snacks and Dzintars cheese spreads are already strong sellers in Estonia, and now with this deal they'll sell even better."
According to its press release, Alta Capital is acquiring 100 percent of Kalev Paide Tootmine, Kalev Chocolate Factory and Vilma, 99.1 percent of Kalev Johvi Tootmine, and 81.26 percent of Maiasmokk. Kalev Paide Tootmine owns 65.6 percent of Valmetek Invest.
Alta Capital has reportedly said that it does not rule out a public listing for one of the subsidiary companies.
Alta Capital operates in the Baltics, Eastern and Western Europe and CIS countries, focusing on long-term investments in well-known and strong companies. The fund's total assets are worth more than 380 million euros.

Some of its other brand-name assets include Latvia's Lauma lingerie-maker and the Silvano Fashion Group, which is listed on the Tallinn Stock Exchange.

Watchdog approves Riga dairy acquisition

The Latvian Competition Council green-lighted on Sept. 24 Alta Capital Partners' indirect acquisition of a controlling stake in Rigas Piensaimnieks by purchasing 100 percent of European Facilities Limited.
The watchdog authorized the deal as the companies involved are operating in different markets, which means that the takeover would not affect competition. "The Competition Council concludes therefore that the merged will not lead to or strengthen a dominant position or reduce competition in the given markets," a council statement said.

Alta Capital Partners announced the indirect purchase of an 80 percent stake in Rigas Piensaimnieks in May this year.
According to the information on the Latvian business register database, 80.07 percent of Rigas Piensaimnieks shares belonged to British Virgin Islands registered company European Facilities Limited, and the owner of the remaining 19.93 percent of the shares was Cayman Islands registered DCEMF Holdings.
Rigas Piensaimnieks was founded in 1993 and generated revenues of 25 million lats (35.7 million euros) in 2006.
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