In the arrangement Kesko Food and ICA Baltic AB will transfer their Baltic grocery operations, in accordance with the agreed valuation principles, to a Swedish limited company, which will operate as an independent joint venture. In the Kesko Group, the book value of the assets to be transferred to the joint venture was about 110 million euros at the end of 2003. Kesko Food's additional investments in the joint venture will be specified as the arrangement becomes effective. Both companies will have a 50% ownership and 50% of the voting rights in the joint venture. The arrangement is estimated to have no immediate significant effect on the result of the Kesko Group.
According to the shareholders' agreement between the parties, the right to transfer shares in the joint venture is limited, and a change in the control of one party or a parent company specified in the agreement may give the other party a right of redemption with respect to the shares in the joint venture.
The new company will support Kesko Food's and ICA's strategies for strong growth and profitability in the Baltic countries. The aim is to reach market leadership in the area and a 25% market share in three years. Consumers in these countries will benefit from wider and more varied product selections, while Kesko Food and ICA expect to gain synergy benefits in purchasing, store network development and logistics.
In 2003, Kesko Food and ICA had combined net sales of about 550 million euros in the Baltic countries. The total value of the Baltic food market was approximately 4.7 billion euros, representing a growth of over 5% during the year. Kesko Food's Baltic business operations have been loss-making, but have developed as expected. ICA's Baltic operations have also been loss-making.
Kesko Food and ICA have complementary strengths in the Baltic countries. Kesko Food is strongest in Estonia, where it holds the market leadership position, while ICA has strong presence in Latvia. The parties currently operate a total of about 150 food stores under hypermarket, supermarket and discounter concepts in Estonia, Latvia and Lithuania, as well as logistics centres.
Provided that an approval is obtained from competition authorities and the other conditions precedent are completed, Antonio Soares will be appointed as CEO of the joint venture and Seppo Hämäläinen as Deputy CEO. Today, Antonio Soares is the CEO of ICA Baltic AB and Seppo Hämäläinen is the Vice President of Kesko Food, Baltic Operations.
Kesko Food has currently six Citymarkets in Estonia and it owns Säästumarket, Estonia's biggest discounter chain, which includes 45 stores. In addition, Kesko Food has a SuperNetto cash-and-carry outlet and a logistics centre in Tallinn. In Latvia, Kesko Food has five Citymarkets and 17 SuperNetto discount stores. The total number of Kesko Food personnel in Estonia and Latvia is about 2,600.
ICA has five RIMI supermarkets and one RIMI hypermarket in Estonia. In Latvia, the company has 34 RIMI supermarkets and four RIMI hypermarkets as well as a logistics centre in Riga. In Lithuania, ICA has a total of 33 supermarkets and hypermarkets, most of which operate under the RIMI logo. In Vilnius, the company has a logistics centre. The total number of ICA personnel in the Baltic countries is about 5,500.
Further information:
Kalervo Haapaniemi, President of Kesko Food, tel +358 1053 22204
Seppo Hämäläinen, Vice President, Baltic Operations, Kesko Food, tel. +371 6557 083
Kalervo Haapaniemi, President of Kesko Food, tel +358 1053 22204
Seppo Hämäläinen, Vice President, Baltic Operations, Kesko Food, tel. +371 6557 083
Kesko Corporation
Corporate Communications
Corporate Communications
Erkki Heikkinen
Senior Vice President
Senior Vice President
DISTRIBUTION
HEX Helsinki Exchanges
Main news media
HEX Helsinki Exchanges
Main news media