A new company will operate the good stores. The two groups will own the new company equally following an exclusive issue of shares against ICA AB, with the new capital providing the financial platform necessary for further growth.
The pact has been approved by the boards of both companies, said Peter A. Ruzicka, vice president of ICA AB and president and CEO of Hakon Gruppen. Ruzicka has been in charge of the negotiations with the owners of the EKO chain.
" EKO is an interesting chain, and the agreement clearly strengthens our position as the leading European food retail company in the Baltic region," said Svante Nilsson, president of ICA AB. "We expect to grow rapidly in Lithuania in the coming years."
With a population of 3.7 million, the Lithuanian market represents a significant opportunity for ICA, Ruzicka said.
There is a consolidation trend within the food retail business in Lithuania, corresponding to the general trend we see in Europe as a whole. The agreement with the EKO chain strengthens our position in the Lithuanian market and will stimulate our efforts to create value for our shareholders," he said.
The first EKO shop opened in 1995. With 10 outlets, EKO is one of the main players in the food retail market in Lithuania.
"ICA AB is focusing strongly on the Baltic region and is therefore a natural partner for us," said Darius Krasaitis, co-owner of EKO.
ICA AB is the largest company within sales and distribution of food-stuffs in Scandinavia. It operates 3,330 retail outlets – 2,200 are in Sweden and 1,200 in Norway – and also owns 50 percent of Statoil Detaljhandel Skandinavia, which owns and operates 1,500 petrol stations in Sweden, Norway and Denmark.
Total net revenue in EKO is estimated to approximately 300 million Litas ($75 million US$) in 1999.