VILNIUS - An alliance of West European retailing companies has acquired a majority interest in the parent company of Iki, Lithuania's second largest supermarket chain, for an undisclosed sum.
The alliance, Coopernic, includes Germany's Rewe, Belgium's Colruyt, Italy's Conad, Switzerland's Coop and France's E.Leclerc, and represents a possible transformation of the retail grocery business in the Baltics, which so far has been dominated by two players 's VP Market and Rimi Baltic.
"Backed with Coopernic's purchasing power and know-how, we will soon offer new, interesting and high-quality products at better prices than those that prevail on the market now," Iki CEO Aidas Marcinkevicius said.
Coopernic acquired 80 percent of Palink, which controls the Iki chain, the consortium's chairman, Michel-Edouard Leclerc told a press conference in Brussels.
Baltisches Haus, an offshore-registered company controlled by the Belgium-based Ortiz brothers who founded Iki, would retain a 20 percent interest in the company.
Iki has an 18 percent market share in Lithuania and is the fastest growing retail outlet in Latvia, Leclerc said.
The transaction, which is subject to approval by the Lithuanian Competition Council, is expected to be completed in the first quarter of next year, Palink said in a statement Nov. 28.
Marcinkevicius told the Baltic News Service on Nov. 28 that the Iki chain would retain its independence once the transaction was finalized. However, the chain may undergo a name change under its new owners.
France's E.Leclerc has expressed an interest in renaming the Iki stores, the AFP news agency reported. Three outlets of the Iki chain may even change the name to E.Leclerc.
The Thomson Financial agency quoted Rewe CEO Alain Caparros as saying in Brussels that Iki would not become the sixth member of the Coopernic alliance since it would probably be absorbed by existing members.
"This strategic cooperation will enable Coopernic to become more attractive to international suppliers, to offer new sales outlets to the alliance members' own brands, to strengthen Coopernic's position in northeast Europe and to extend the zone of influence of its members," Coopernic said in a statement.
The Coopernic group is active in 18 countries and has a combined 10 percent share in those markets, the consortium said.
The arrival of a renowned West European retailer will be welcomed by Baltic consumers, who have done much of their shopping at Maxima and T-Market shops, owned by Lithuania's VP Market, and Rimi, which is controlled by Sweden-based ICA Baltic.
There had been hopes that Germany's Lidl would enter the market via Estonia, but the retailer eventually backed out due to skyrocketing costs that made investing in the region less attractive.
The Iki chain currently includes 209 outlets in Lithuania and Latvia (178 retail in Lithuania and 31 in Latvia).
The chain is projecting sales to grow 30 percent to some 2.2 billion litas (637 million euros) this year.
Iki founder and chairman George Ortiz praised the transaction. "We are very happy with this deal. We are convinced it is the best thing for Iki," he said.
"The contribution of Coopernic will allow the company to develop in a confident and determined way," he said.
Iki shareholders have until now included Citigroup Venture Capital International, a company of US Citigroup, which has invested 50 million euros into the Lithuanian grocer.
The transaction will also need approval from European Union authorities, who will likely green light the deal in the first quarter of 2008.
