The Competition Authority has approved the merger of AS Maag Grupp’s Farmi Piimatööstus with rival dairy producer Tere, whose owner went bankrupt in 2016. The company is still facing reorganization, with an according plan pending approval.
"The merger of the two dairy companies will have a positive impact on Estonian agriculture and manufacturers as a whole, and will increase their competitiveness on export markets. The plan is to grow vigorously—we believe that with a merged company, we can reach across the border more than ever. The synergies in the two companies will create a very good premise for that," Roland Lepp, chairman of the supervisory board of AS Maag Grupp, said in a press release on Wednesday.
In the first phase of the merger, Tere will continue its usual operations as a subsidiary of Farmi Piimatööstus. The companies' brands will remain, and the long-term strategy of the merged company will be worked out during the implementation of the reorganization plan for Tere, AS Maag Grupp said.
"The merger will give Tere the opportunity to continue production and utilize its existing potential more strongly,” CEO of Tere Margit Talts said. "We will use production opportunities we have not used before.” She added that they would also be able to significantly increase the production of skimmed milk powder. “We will try to improve work in the merged companies—greater production capacities create the premise for the specialization of units."
Talts also said that the merger would result in the creation of linked companies, which would look further than the Estonian market. “Together the merged companies will have better opportunities to increase exports and a sufficient enough production capacity to increase sales volumes in neighboring countries," Talts said.
"Tere is also actively dealing with product development—the designs of the main milk packages will be updated already in July, while the package of one of the oldest and most popular products, the Merevaik cream cheese, will receive a new anniversary design, and in autumn we will bring out new lines of products."
AS Maag Grupp on Mar. 15 filed a notice of concentration with the Estonian Competition Authority to be able to acquire rival dairy group Tere. The Competition Authority approved the merger on Jul. 4. The license allows Farmi Piimatööstus to acquire shares in Tere.
The reorganization plan of Tere is yet to be approved by the Harju County court.
Editor: Dario Cavegn