Analytics, Financial Services, Lithuania, Markets and Companies, Mergers and take-overs, Real Estate, Retail

Rokas Grajauskas, senior Danske Bank economist for the Baltic states, says that the deal's impact on the retail market may be minor, as the concentration is taking place in a single segment of the retail market.

"I do not think that the deal would have a special effect on the retail market, as the market share will not be dominant. (...) Nevertheless, there are other segments – Norfa and Lidl are clearly in the cheapest segment, Maxima is somewhere in the middle, while Rimi and Iki are focused on clients with medium and higher income. Concentration is taking place in this segment only. I see there will be more benefit due to economies of scale rather than any problems due to competition," said Grajauskas.

Mindaugas Matulaitis, head of corporate finance and debt capital markets at DNB bank, says that the value of the deal could have been bigger.

"We could have expected more - 6 EBITDA where the buyer will receive more synergies from the deal is not a very good mark. This reflects the level of evaluation in stable and small markets that are not growing, such as that in Lithuania. We can say that the evaluation is objective, but it is my opinion that it is in the lower range of the evaluation," said the analyst.

Marius Dubrovnikas, chairman of the Tax Commission at the Lithuanian Business Confederation, said the price of the transaction makes it clear that the seller aiming to get rid of the business was more eager to conclude the deal.

"The value of the deal shows that the seller indeed wanted to sell his business, that is why we have the price of 6.1 EBITDA. When there is a lot of willingness to invest, there may be eight or nine EBITDA, and in case of one of the best and the exemplary transactions – the sale of Kaunas' Sanitas, the number of EBITDA was, I think, eleven," Dubrovnikas told.

"The seller wanted to sell, which shows that another business in Lithuania had become less interesting than what it was before. I see this as the defeat of one of the market participants in the competition battle," he added.

In Matulaitis' words, the relatively low value of the transaction may also mean there were no other parties interested in the Iki chain.

He said Palink's owner Rewe Group decided to withdraw from the small Lithuanian market, which could have been due to the accession by Germany's Lidl, which caused a turmoil, as well as the ruling coalition's plans to curb alcohol sales.

Earlier on Friday, Sweden's ICA Gruppen said that Rimi Lietuva had signed a contract with Palink, the operator of the Iki chain, on acquisition for 213 mln euros, however, the price may still be revised depending on Palink's own money and debts. ICA Gruppen said 6.1 EBITDA would be paid for Palink.

The deal is yet to be approved by the Competition Council, with a conclusion expected by the last quarter of 2017. The Iki network currently includes 236 stores in Lithuania. Iki had about 15% of the Lithuanian market in 2015, while Rimi Lietuva's share was approximately 8%