VILNIUS - Lithuania's diary industry is bracing itself for a series of mergers and acquisitions, with leading producers positioning themselves for the best deal possible. Most of the speculation has focused on Rokiskio Suris, with reports claiming that two Lithuanian companies, Hermis Fondu Valdymas and Sanitex, were planning to invest in the dairy.
The daily business paper Verslo Zinios said that market experts predicted that the investors could pay more than 200 million litas (58 million euros) for a controlling interest in the dairy.
Rokiskio Suris announced in August that it was searching for an investor, and last month the company confirmed that some investors have expressed interest and negotiations were underway.
Company CEO Antanas Trumpa has refused to comment on the negotiations, hinting that investors were interested in a big market share.
"There are some potential investors, but they are interested only on the condition that we merge with another dairy. However, Lithuanian laws prohibit such mergers. But if we stay isolated, we will go bankrupt after Lithuania joins the EU," he told Baltic Business News earlier this month.
Indeed, the Competition Council has said it would object to any merger of dairy companies and their acquisition by a single investor on the basis of the disproportionately large market share that the merged dairy would enjoy.
Still, the markets have reacted positively to the speculation, pushing up dairy shares to record highs. Rokiskio Suris' share price has risen 47 percent since early August to 47.75 litas per share.
In the meantime the dairy is upgrading production to improve both its product line and bargaining position. The company is investing 30 million litas in production, 11 million of which will be put into a new generation of cheese production machinery from Denmark.
"We will upgrade production and improve the quality of our products with the help of the European Union's SAPARD program. Under this program we will get about 12.5 million litas in aid," Rokisko Suris' production director Dalius Trumpa said earlier.
He added that the new equipment was already being manufactured and the assembled line would be put into operation early next year.
Reports have speculated that another dairy, Zemaitijos Pienas, could be the first to be acquired.