RIGA - Drogas, Latvia's largest retail chain of household goods and cosmetics, has been purchased by a Hong Kong-based retail group that wants to use it as a "springboard" for launching operations in EU and CIS countries.
A.S. Watson, the retail and manufacturing division of Hutchison Whampoa Limited, acquired Drogas from Rota at an undisclosed price as part of the company's strategy to expand operations in Eastern Europe.
"Latvia and Lithuania are our springboards to the Baltic, Confederation of Independent States and Nordic markets. The region's recent accession to the EU gives us a new powerful impulse to the creation of a free, secure and prosperous economy," said Ian Wade, A.S.Watson's managing director. "We see great potential in these markets.'
Speaking of Drogas, Wade said the chain fit A.S.Watson's health and beauty retail concept.
"Drogas is the fastest growing company in the region, and our plan is to keep developing this business," stated Wade.
Rota's main shareholder, Rafails Deifts, said that Drogas' owners had decided to sell, given that A.S.Watson was an international leader with enormous sales and extensive experience in the health and beauty retail business.
"Drogas has been the most successful of long-term development projects in Rota's history. Selling this business to A.S.Watson is an excellent achievement," he said.
According to Deifts, the new owners will keep the current Drogas management and personnel, for whom the sale would provide an international career opportunity.
Commenting on the deal, Drogas general manager Andrejs Jernevs said, "This is an important milestone for Drogas as well as the country, being one of the first major foreign investments since Latvia and Lithuania joined the EU. I believe that ASW will inject significant strategic value in the chain, and its global strength will bring us to new heights."
Drogas' further expansion in the region will be managed by Dennis Casey, A.S.Watson's newly appointed executive director for Eastern Europe.
"Though this region's retail market is still developing, its proximity to Central and Western Europe, where ASW has established businesses, will create significant synergy in purchasing, operations and earnings growth," Casey said.
Set up in 1993, Drogas currently operates 83 stores in Latvia and Lithuania, of which 24 are in the latter country. It plans to open up three more stores this month.
In Latvia, Drogas has a 30 percent market share.
In 2003 the retail company earned a profit of 1.39 million lats (2 million euros), up 12 percent year-on-year, on a turnover of 22.7 million lats, up 14 percent year-on-year.
A.S.Watson is an international retail and production company operating in 18 countries in Europe and Asia. Its turnover in 2003 was 6.6 billion euros. The company acquired the Netherlands-based Kruidvat group in 2002, which followed the acquisition of the U.K.-based Savers Health & Beauty chain in 2000.