Furniture companies join forces

TALLINN - The merger of Finnish furniture companies Asko and Sotka, which was concluded last week, left the Estonian furniture market feeling cool and collected.

The two companies are big players on the Estonian market, but Antti Narhinsalo, manager at Sotka's Estonian subsidiary, did not predict major shifts in market shares.

"The merger of these companies will not bring along any big changes in the near future. The trademarks will not change either. Possible changes are inside the company, but the clients will not feel that at once," he said.

After the merger, the two companies will take 40 percent of the market, but Narhinsalo said he is not sure this is the top position.

The Finnish companies' turnover is said to match that of the Estonian furniture company Tallinna Mooblimaja.

Even if the merged company will have the largest market share, Tallinna Mooblimaja's management said it can beat the new competitors with price.

"Asko's prices are relatively high, but there is no difference between the prices of the local furniture companies compared to Sotka," said Narhinsalo.

The Finnish and Estonian companies can, however, compete on the quality level.

Narhinsalo said the quality of Estonian furniture is good, and Sotka has been cooperating with local producers for nine years selling Estonian furniture abroad.

The turnover of Asko's parent company is about 1.6 billion kroons ($114 million) and Sotka's is 1 billion kroons. Together, they make about 28 percent of the Finnish furniture market.

The stocks of the merged company will probably be listed on the stock exchange in five years, since this was one of the objectives of the owner.