Stumbras sell-off enters final stretch

  • 2003-09-25
  • Steven Paulikas
VILNIUS - The controversial privatization process of Stumbras, the Lithuanian distiller, has entered its final stages, with bidder Latvijas Balzams likely to be left out of the competition.
The privatization committee of the State Property Fund announced on Sept. 23 that it had granted final approval for the sale of Stumbras to Mineraliniai Vandenys, a Lithuanian alcohol wholesale company.
The announcement all but seals the fate of Stumbras, the last remaining hurdle being official approval from the government, which is expected at the end of September.
In an unusual move, the privatization committee, which has the final say in government sell-off projects coordinated by the State Property Fund, deliberated for over a week before coming to its final decision.
"Given the circumstances surrounding the case and the attention that has been paid to it by the media, the committee wanted more in-depth information," said Romualdas Ginevicius, chairman of the committee.
"We examined all the material received by the State Property Fund and had a number of meetings with professional representatives from the industry. After this process, we affirmed the decision made by the State Property Fund," he said.
The committee's final assessment essentially concludes the Stumbras stormy privatization.
The tender offer for a 91.95 stake in Stumbras, distiller of numerous strong spirits and Lithuania's largest vodka producer, precipitated an international incident earlier this summer when officials rejected a bid lodged by Latvijas Balzams on grounds that the Latvian alcohol producer was an "unsound partner."
Latvijas Balzams' bid of 158 million litas (45.8 million euros) for the stake was the highest among competitors, and the company's legal complaints filed in a Vilnius district court and later the Lithuanian Court of Appeals were thrown out in August.
In spite of the State Property Fund's claims that it was acting on intelligence information gathered by the state security department, Latvian officials, most notably Agriculture Minister Martins Roze, stood by Latvijas Balzams and leveled charges of nepotism at Lithuania.
In spite of the seeming inevitability of the deal, Latvijas Balzams has vowed to continue fighting the decision.
In a statement issued the day of the privatization, Latvijas Balzams expressed its hope that the government would "evaluate and review" Mineraliniai Vandenys' offer and vowed to continue its legal battle not only in Lithuanian courts but in international ones as well.
"We have provided comprehensive answers to all of the State Property Fund's questions, and therefore it is as of yet not clear to us why our company, the largest taxpayer in Latvia, has been labeled unreliable," said Latvijas Balzams general director Rolands Gulbis in the statement.
Mineraliniai Vandenys reportedly increased its original 152 million litas bid for the controlling stake in Stumbras after negotiating with the government, although the final cost of the transaction will not be made public until after the deal is finalized.
The original asking price for the stake was 107 million litas.
The State Property Fund has had similar difficulties with the sell-off of Alita, the local producer of brandy and sparkling alcoholic beverages, and is currently reviewing the reliability of Luigiterzo Bosca, the Italian winner in the auction for an 83.77 percent stake in Alita.
Negotiations have proceeded more smoothly in this summer's privatization of the two other state-owned distillers.
The government plans to sign an agreement with the Polish company Sobieski Dystrybucja, a subsidiary of the French firm Belvedere, for the purchase of Vilniaus Degtine, a vodka distiller, later this autumn. Artrio-2, a Vilnius-based alcohol wholesaler, is set to purchase a 72.93 percent share in Anyksciu Vynas, the country's largest producer of wines.