Investments, Legislation, Lithuania, Markets and Companies, Mergers and take-overs, Retail

The Lithuanian Competition Council said on April 18th that Rimi Lietuva has failed to meet its commitment to sell 17 stores, a condition the authority set for clearing the deal.

Rimi Lietuva undertook to sell 5 Rimi and 12 Iki stores in six cities and towns to obtain the regulatory approval for the acquisition.

Shareholders of Palink, the owner of Iki, and Lithuanian shoppers are most affected by the competition authority's decision to block Rimi Lietuva's 213-million-euro acquisition of the rival retail chain, analysts and market participants told BNS.

"We can say that the Competition Council's decision adversely affects the seller (Germany's Rewe Group and other shareholders of Palink)," Marius Dubnikovas, chairman of the Tax Commission at the Lithuanian Business Confederation, told BNS.

"It will probably be difficult to attract a new similar offer, because the field of potential investors is very limited," he said.

According to Dubnikovas, if the shareholders make a fresh attempt to sell the Iki chain, any new buyer will look at exit possibilities before making their investment.

"The future buyer would probably imagine that competition in this market is fierce, and the Competition Council's decision shows that exit possibilities are very limited here. All this brings down the price of the acquisition," he said.

Laurynas Vilimas, head of the Association of Lithuanian Trade Companies, says that the competition watchdog's decision sends a negative signal to foreign investors. "Shoppers are the losers, because the merger would have heated up competition among major market players," Vilimas told BNS.

"The business community as a whole suffered a blow because we missed an opportunity to raise our retail sector to a much higher level," he added.

Eimutis Radzvila, president of the Association of Independent Trade Companies, called the Competition Council's decision "strange", saying that the authority abused its powers. "That description of an inappropriate buyer looks very strange to me. There has been no such forced sale in the Lithuanian market so far. And now they have buyers who are not given the right to buy. This is some kind of misunderstanding. I think the Competition Council is abusing its powers," he said.