Estonia, Foodstuff, Legislation, Markets and Companies, Mergers and take-overs

"The merger of two dairy companies will have a positive impact on the Estonian agriculture and manufacturers as a whole and will increase their competitiveness on export markets. The plan is to grow vigorously -- we believe that with a merged company, we can reach across the border more than ever. The synergy of the two companies will create a very good premise for that," Roland Lepp, chairman of the supervisory board of Maag Grupp, said in a press release.

In the first phase of the merger, Tere will continue operating as a subsidiary of Farmi Piimatoostus. The companies' brands will remain and the long-term strategy of the merged company will be worked out during the implementation of the reorganization plan, Maag Grupp said.

"The merger will give Tere the opportunity to continue production and utilize its existing potential more forcefully," head of Tere Margit Talts said. "We will use production opportunities we have not utilized before in order to value more Estonian raw milk and will also be able to significantly increase the production of skimmed milk powder. We will try to improve work in the merged companies -- greater production capacities create the premise for the specialization of units."

Talts said that the merger will result in the creation of linked companies, which will look further than the Estonian market. "Jointly, the merged company will have better opportunities for increasing export and a sufficient enough production capacity to increase sales volumes in neighboring countries," Talts said. "Tere is also actively dealing with product development -- the designs of the main milk packages will be updated already in July, while the package of one of the oldest and most beloved products, the Merevaik cream cheese, will receive a new anniversary design, and in fall we will bring out new lines of products."

AS Maag Grupp on Mar. 15 filed a notice of concentration with the Estonian Competition Authority to be able to acquire rival dairy group Tere and the Competition Authority authorized the merger on Jul. 4. The license allows Farmi Piimatoostus to acquire shares in Tere.

The reorganization plan of Tere is yet to be approved. If the Harju county court approves the plan, it would allow Tere along with Maag Grupp to start performing obligations to creditors according to the reorganization plan and continue its everyday work in order to grow and develop the company.