According to an agreement signed July 22, the Finnish company will purchase 49.9 percent of AB Ragutis' shares from Plzensky Prazdroj, a Czech brewery, for approximately $6 million.
"We turned over our share of Ragutis but still plan to remain in the Lithuanian market with our popular pilsner beers Gambrinus and Pilsner Urquell, and we hope to continue our successful cooperation with Ragutis and our clients in Lithuania," said Vitas Sedlicekas, strategic planning director for Plzensky Prazdroj.
The investment, subject to final agreement on terms and conditions and approval from the relevant regulatory authorities, will be made in accordance with a letter of intent by Aug. 30.
The Finnish company is represented in the other two Baltic countries through its subsidiary A. Le Coq which holds 100 percent of Tartu Brewery in Estonia and 50.29 percent of Cesu Alus brewery in Latvia.
"We are hoping for better operations, because the Olve group works in partnership with Estonia's Tartu and Latvia's Cesu breweries and knows the Baltic market well," said Ragutis Director General Kestutis Paplauskas.
Olve Managing Director Markku Ronkko said the intended strategic partnership with AB Ragutis would fulfill Olve's long-held ambition to expand to the rapidly developing Lithuanian beverage market.
Ragutis is the fifth largest brewery in Lithuania with a market share of 9 percent. It is the largest brewery in Kaunas, the second largest city in Lithuania.
In the past two years the company has undergone thorough renovation of production facilities, including an upgrade of the brewing, fermentation and lagging equipment. In 1998, Ragutis produced 15.6 million liters of beer.
The company's 1998 turnover was 34 million litas ($8.5 million) with a net profit of 4.6 million litas. The total share capital of Ragutis is 21.8 million litas consisting of 2.18 million common shares.