RIGA - The construction companies Moduls-Riga and Velve announ-ced a major merger with the goal to become the leading construction company in Latvia.
Moduls-Riga, a specialized subsidiary of the German group Modulex GmbH, purchased 75 percent of Velve's shares.
Keislers, who will retain ownership of the remaining 15 percent of Velve's stock, said that the need for the merger came from the current situation in the construction market and the need for a bigger company that will be able to take advantage of opportunities within the EU.
The change of owners and consolidation would help to concentrate the group's full spectrum of construction services, which includes design, general construction, specialized tasks relating to utilities and project management.
In 2002 Velve ranked 15th and Moduls-Riga 19th in terms of the volume of construction and installation work in the country, according to the Latvian Constructors Association.
Both companies have been cooperating for years and in 2001 initiated a partnership for the construction of four sports halls.
Moduls-Riga and Velve said they would continue operating under their present names and did not plan to pool their assets, although in the future it was possible to form a consolidated balance sheet.
The deputy general director of Moduls-Riga, Maris Martin-sons, and Keislers said that the group aimed to become the leading construction company in Latvia. In a joint statement, the two said that "other big construction companies have similar plans."
Both Velve and Moduls-Riga will continue to take part in construction tenders, but in the future they plan to concentrate on several real estate investment projects. "Lately we have purchased several pieces of land. Our construction program for the next two to three years reaches 100 million lats (153 million euros)," Martinsons said.
Executives of several big Latvian construction companies said that the merger would not have a significant impact on the local construction market.