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

"Tere's brands are probably the strongest in the Estonian market and its share of the domestic market is either the highest or among the top three, depending on the product. Thus, it would be the company's market share in Estonia that would be the most interesting to a potential buyer from Lithuania," Tadas Povilauskas told BNS.

According to the analyst, Lithuanian companies would probably not need Tere's production capacity.

"The need for production capacity is not high for Lithuanian producers. All the more so because export markets in Russia are closed and one has to refocus production on products for more distant markets," Povilauskas said.

"Lithuanian dairy producers hardly expect to return to Russia in the short term. Therefore, as I have already said, Tere will attract those who want to have a large share of the Estonian market," he said.

According to Povilauskas, Tere's shares are probably worthless, but refinancing 36 million euros in debts would be a challenge to Lithuanian dairies.

"Tere's shares are probably not worth anything, but Tere's loans would have to be refinanced. Lithuania's major dairies are in a good financial situation, but it is only those with the most funds available and the least liabilities that could incorporate the debts of such a player as Tere," he said.

The analyst would not say what companies are in the best financial position to acquire Tere.

Based on available information on the country's largest dairy groups, Zemaitijos Pienas and Rokiskio Suris seem to be in the best position. Both companies had no long-term loans in late September. Zemaitijos Pienas had 13.3 million euros in cash and cash equivalents, and Rokiskio Suris had only 890,000 euros.