Skanska acquires the Estonian construction company EMV

  • 2000-01-13
  • By Kairi Kurm
TALLINN - One of the world's largest construction companies, Skanska,
is expanding and strengthening its activities in the Baltic countries
through the acquisition of a majority stake in the Estonian listed
construction company EMV. Skanska is listed on the Stockholm Stock

According to the contract signed between Skanska and EMV's current
shareholders, the Baltic Republics Fund, Hansa Investment Fund and a
number of private investors, Skanska acquired a 61 percent stake in
EMV for 86.7 million kroons ($5.7 million). The contract became
effective on Jan. 3.

Skanska does not plan any significant changes in the business
activities of EMV.

"One of the biggest changes in the company that I foresee when it
becomes part of the Skanska concern is that its financial position
will strengthen,"said Jaanus Otsa, board chairman at EMV. "We do not
have any financial difficulties. We overcame them two years ago.

"We will grow in profitability rather than sales. I do not see any
deep increase in market share in the near future. We will win more
local bids because we are financially stronger, and we will also get
more offers from the clients of Skanska,"said Otsa.

Skanska is planning to gain 100 percent control over the company and
will thus make a public offering to all EMV shareholders for the sale
of shares. Skanska launched a tender offer to all small shareholders
to purchase the remaining shares at the same price per share and will
apply to the Tallinn Stock Exchange for the delisting of EMV shares.

The price paid per share is 30 kroons, which is 13.94 percent higher
than the average six-month share price on the Tallinn Stock Exchange.

The price of the deal is in accordance with draft take-over rules of
the Tallinn Stock Exchange, said Piret Raudsepp, member of the
council of EMV and board chairman of Trigon Capital, which handled
the tender. Skanska would not make better offers to the small
shareholders after the end of the public offering, he said.

"The shares of EMV will not be so attractive to small investors
[after the acquisition]. The amount of information they get about the
company is smaller. Also, the strategy of Skanska foresees no
dividends in the near future,"said Raudsepp.

Raudsepp was one of the persons who stopped the merger of two
construction companies, EMV and MERKO, in the spring of 1998, because
she felt the conditions of the deal were not favorable to the

EMV, one of the leading construction companies in Estonia with 542
employees, also operates in Lithuania.

EMV's construction services cover both housing and civil engineering.
Skanska is operating in real estate development businesses in Latvia
and Lithuania.

The company's market share in Estonia is less than one percent. EMV,
reporting sales of 778 million kroons in 1998, has a five-percent
market share, similar to its competitors, Merko Ehitus and FKSM, Otsa