VILNIUS - Lithuania began to solidify its inroads into Latvia's dairy market after Rokiskio Suris, the country's largest cheese maker, acquired a controlling stake in Jekabpils Piena Kombinats (Jekabpils Milk Factory), the company said in a statement to the Vilnius Stock Exchange.
Rokiskio Suris acquired the stake in the much smaller Latvian dairy from Arnis Zarinka, Jekabpils Milk Factory's largest owner, whose stake has shrunk to 11.68 percent as a result of the deal, according to the Latvian business register.
The deal comes at a time when Lithuanian dairies and cheese makers are aggressively buying up Latvian milk and driving up dairy prices in the neighboring country.
Milk prices are increasing rapidly throughout Europe, though Latvia is particularly feeling the pinch after milk and dairy prices soared 8 percent in October, the Latvian statistics department announced Nov. 8.
Arvids Usca, head of the Latvian Central Association of Dairies, said that Rokiskio Suris probably bought the stake with an aim to increase milk purchases in Latvia.
He said that the deal might have an adverse impact on the domestic milk market, as Latvian milk producers are already selling a sizable part of their produce to Lithuanians.
"An increase in Lithuanian milk purchases will lead to even more severe milk shortages in Latvia," Usca said.
Zarinka told the Baltic News Service that for the time being he can only confirm the fact of the merger and that more details would be released in the near future. He said the merger with Rokiskiu Suris was not expected to cause any radical changes in the company.
Jekabpils Milk Factory posted 2.9 million lats (4.1 million euros) in its 2006 turnover, a 38 percent rise from 2005. The company's profit fell to 20,400 lats.
Rokiskio Suris is Lithuania's largest milk processing group. In January to October this year the company reported 571.2 million litas (165.5 million euros) in turnover a 35 percent rise year on year, while its consolidated net profit tripled to 30.04 million litas.
The Rokiskio Suris group comprises several companies, including Rokiskio Pienas, Utenos Pienas, Ukmerges Pienine and Eisiskiu Pienine.
CEO Antanas Trumpas and his company Pieno Pramones Investiciju Valdymas own a 47.97 percent stake in Rokiskio Suris.
A 38.27 percent stake in Jekabpils Milk Factory belongs to Janis Zarinka.