Latvia, Legislation, Markets and Companies, Mergers and take-overs, Retail

Latvian Competition Council is to make the final decision on the deal.

If the Competition Council approves the agreement, 51 "Iki" stores will become retail outlets of Mego.

Palink representative Velga Freiberga told the Nozare.lv business portal that the amount of the deal would not be revealed to the public. The companies have already submitted the relevant documents to the Competition Council.

The Competition Council's representative Inita Kabanova said that the council had received the acquisition report on January 10 and the documents were officially accepted today. The Competition Council must take a decision on the acquisition application within one month or, if in-depth analysis is necessary, in four months.

"Being a local company with experience spanning fifteen years, this is a historic and very important event to us. The decision to acquire Palink shares was taken because we were willing to expand so as to become more competitive on Latvian market, and offer our customers better-quality service," said Hupenija.

Palink Executive Director Emil Stefanov commented that the decision to sell the company's business in Latvia was taken in order to optimize operations of the Palink group and concentrate on those markets where Palink operations were more efficient. Due to a small market share, competing with other retailers in Latvia was problematic to Palink. Likewise, an unfounded insolvency case against Palink in 2012 forced the company to cut investments in Latvia, explained Stefanov.

The Latvian branch of Palink, representing the "Iki" chain stores, is one of the largest food retailers in Latvia. Palink has been present in Latvia for nine years. In 2013, the company had 51 stores and employed more than 900 people.

On the other hand, Mego is one of the largest retail trade companies in Latvia, in business since 1999. Mego runs a total of 36 stores and employs more than 600 people. The company has stores in various cities and towns of Latvia: Riga, Aizkraukle, Baldone, Bauska, Broceni, Cesis, Jekabpils, Jurmala, Sauriesi, Liepaja, Talsi, Tukums, Valka and Ventspils. A total of 53 stores in Latvia operate under the Mego brand.

The Latvian branch of Palink was established in 2003, the company's share capital is LVL 60,000,000 (EUR 85.37 million). Since 2008, alliance Coopernic has been the largest shareholder in the company.

Palink posted LVL 12.46 million (EUR 17.73 million) in losses in 2012, 43% more than in 2011, according to "Firmas.lv" data. The company's turnover amounted to LVL 66.92 million (EUR 95.22 million) in 2012 – 9% down on 2011.

Mego posted LVL 337,400 (EUR 480,077) in losses in 2012, compared to a loss of LVL 301,246 (EUR 428,634) in 2011. The company's turnover decreased to LVL 31.9 million (EUR 50.42 million) last year, 9.8% less than in 2011.

Mego share capital is LVL 2,100,000 (EUR 2.99 million). The company belongs to Mihails Ulmans (62%), Viktors Karbanovs (18%), Aleksandrs Morozs (10%) and Grigorijs Vovks (10%).