Estonia's Agrone acquires Riga and Valmiera dairies in Latvia
Estonian agricultural group Agrone Grupp has completed a deal to take over the two largest dairy processors in Latvia. The price has not been disclosed.
On Friday, 30 October, Estonian agricultural group Agrone Grupp completed the purchase of the Riga and Valmiera dairy plants in Latvia. The price was not disclosed by agreement between the parties. The deal places both processors under the ownership of a company that has so far focused mainly on raw milk production.
What was bought
Through its parent company, Agrone Grupp acquired 100% of the shares in Food Union Management, which owns both Latvian dairies. The stake was bought from the previous owner, Food Union Luxembourg Holdings II S.à r.l. The transaction closed after approval from the competition authorities of Estonia and Latvia and was financed by SEB bank. Eversheds Sutherland and PwC acted as advisers.
The company's view
Raul Jeets, chairman of the management board of Agrone, called the deal historic for the dairy industries of both countries. He said Rīgas piena kombināts is a company with a history of almost a century and a firm market position, with brands such as Kārums and Lakto known across the Baltic region. By combining Agrone's raw milk expertise with the dairy's strengths in processing, product development and sales, the group expects to expand its scale, improve efficiency and strengthen its competitiveness.
Jeets noted that Agrone has worked for many years to extend its business from milk production to processing. He described the acquisition as an important strategic step that opens new growth opportunities in the Baltic states and allows exports to more distant markets.
What happens next
The Riga and Valmiera dairies already export about a third of their output to more than 30 countries. Together the two plants employ slightly more than 750 people.
The change of ownership will initially bring no changes to daily operations or to relations with employees, customers, raw milk suppliers and other partners. Production and deliveries will continue as usual. The next step will be for Agrone and the management of the Latvian companies to work out a further development strategy together.
