"The aim of Fazer Bakeries is to strengthen its positions on the Baltic market. Both Gardesis and Ogres Maiznieks are producing high quality bakery products and their trademarks are well known in their markets of operations. For that reason they fit very well in Fazer Bakeries network," said Fazer Bakeries managing director Paul Taimitarha.
In Lithuania, Fazer Bakeries has become the first foreign investor to acquire an equity stake in the bakery and confectionery industry, while in Latvia it has also purchased the Druva trademark that was previously used by the local Druva bakery.
The values of the deals are not being disclosed. Fazer Bakeries hinted it might consider other acquisitions since its present market share is still small.
A Fazer bakery has been operating in Estonia since 1994. Fazer also operates in Sweden.
Finnish attempts to consolidate the bakery industry in the Baltics follows major Scandinavian takeovers in the beer and dairy sectors as far as food industry is concerned.
Fazer Bakeries, a member of the Fazer Group, bought a majority stake in Gardesis, one of the major local bread and sweets producers, in December. Gardesis, a privately owned company, is based in Kaunas, Lithuania's second-biggest city.
A representative of Fazer Bakeries declined to give any specific details about the deal. He said only that Fazer had acquired a similar stake in Gardesis to that it owned in the St. Petersburg-based bakery Khlebny Dom. The Finnish company holds 58.2 percent of shares in the biggest bakery in the city.
Kestutis Drazdauskas, CEO of Gardesis, told BNS Fazer Bakeries had purchased a new share issue of his company for a few tens of millions of litas. The negations lasted around six months. Drazdauskas and his wife owned the company prior to the acquisition deal.
"Our main goal is to set up a leading chain of bakeries in Lithuania, and we have all the necessary resources for that," said Taimitarha.
He said Fazer might consider further acquisitions in Lithuania in the future, noting that this would depend on Gardesis' performance results.
Gardesis currently has a 5 percent share of the domestic bakery market and ranks third or fourth on the Lithuanian bread market in terms of sales. Gardesis and another three major bakeries have a combined market share of around 30 percent in Lithuania. Drazdauskas said the company did not plan to change its name or replace its management. The company intends to launch a new line of products under the name of Fazer.
Gardesis invested around 8 million litas ($2 million) in reconstruction projects last year. The company had an annual turnover of 13.5 million litas last year, compared to a turnover of 12.4 million litas in 2000. It posted a pretax profit of 766,000 litas for the first nine months of 2001 after making an annual net profit of 1.09 million litas in the previous year.
The largest bread and pastry producer in Lithuania, Vilniaus Duona Plius, sold production for 89.77 million litas in the first 11 months of 2001. The bakery is controlled by VP Mazmena, which is a part of the Vilniaus Prekyba group, the largest retail trade chain in Lithuania.
Ogres Maiznieks is a medium sized bakery with a 2002 sales target set at some 4.8 million euros ($4.36 million). The company is estimated to cover 2 percent to 3 percent of Latvia's market.
Hanzas Maiznicas, the largest bakery in Latvia, earned a profit of 332,000 lats ($528,000) in 2000 on a turnover of 11 million lats. Hanzas Maiznicas said a year ago it held 30 percent of the Latvian market. The largest shareholders in the bakery are Vaasan&Vaasan Oy from Finland and a local company, M.Investicijas.
According to information from Lursoft data bank, Fazer Bakeries Ltd. owns all of Ogres Maiznieks capital shares at 361,240 lat face value. Previously the company register had several legal entities and private individuals registered as Ogres Maiznieks owners.
Druva bakery so far owned 50 percent of shares in Ogres Maiznieks that were also sold to Fazer Bakeries. Currently Druva's production equipment is being moved to Ogres Maiznieks.
Fazer Bakeries director Juha Karimaa said the company, after acquisition of Ogres Maiznieks, would continue operations using the local management.
Karimaa said the company had drawn up an investment plan for more than three years envisaging to accomplish Ogres Maiznieks' products choice, using the experience of Fazer Bakeries. He did not specify the total financial amount of the investment plan.
Fazer Eesti AS has posted sales of 135.5 million kroons ($8.15 million) and a profit of 5.6 million kroons for 2000.
The net sales of Estonia's biggest bakery, AS Leibur, totaled 212 million kroons in 2000 bringing a profit of some 22 million kroons. The company said it had a market share of 27 percent.
Fazer Bakeries had a turnover of 270 million euros in 2001.