ATRIA SIGNS LETTER OF INTENT
ATRIA GROUP PLC STOCK EXCHANGE RELEASE 8 OCT. 2004 9:00 A.M.
ATRIA SIGNS LETTER OF INTENT TO ACQUIRE MAJORITY STAKE IN THE ESTONIAN COMPANY VALGA MEAT INDUSTRY LTD Atria is on track with its strategy for the Baltic rim. The company signed a letter of intent with the main shareholders of AS Valga Lihatööstus (Valga Meat Industry Ltd), whereby they will sell their majority stake to Atria Group plc. Valga Meat Industry Ltd (Valga) is the second-largest Estonian red meat company. Valga's main shareholders hold a total of 75.83 per cent of its shares. Atria aims to sign a letter of intent with Valga's minority shareholders to acquire the remaining shares under similar terms and conditions. Both Atria and Valga aim to close the entire transaction by the end of 2004. Valga Meat Industry Ltd Valga is the second-largest red meat company in Estonia and it also holds a good market position in Latvia. Valga's market share in Estonia is approximately 15-20 per cent and its products are sold in the main retail chains of Estonia. In addition, Valga is well positioned in Latvia, where it has entered into contracts with Rimi and Citymarket. Valga's main products are various high-quality sausages (approximately 60 per cent of turnover), smoked meat products, cold cuts, meat and various special products. The company's brand is Maks & Moorits. Valga was privatised in 1994 and since then has been successfully managed by Mr. Elmut Paavel, who will stay on as its General Director. After its privatisation, Valga has performed well and turned a profit. In 2003 Valga's turnover amounted to EUR 20.9 million and its net profit after taxes to EUR 527 thousand. Both turnover and profitability are estimated to increase in 2004. Valga has one production plant in the town of Valga, located close to the Latvian border. Valga is engaged in the entire meat processing chain, from slaughtering and cutting to further processing. During the past three years the company has invested around EUR 8 million in up-to-date production machinery and equipment that meet the requirements of the EU and the EN ISO 9001:2000 quality system. In addition, Valga owns the second largest cattle farm (sows, pigs and beef cattle) in Estonia. As Estonian cattle farms are usually small, Valga's own farming operations are seen as a considerable advantage in terms of ensuring the supply of raw material. Valga has around 30 per cent self-sufficiency in pork and 10 per cent in beef. Strategic and operational compatibility of Atria and Valga Atria and Valga evaluate that Valga is in an excellent position to see further growth and profitability improvement in the future thanks to internal restructuring and the synergies achieved by joining forces with Atria. Atria and Valga have shared objectives for their business, products and customers. Furthermore, Valga, together with Atria's subsidiary UAB Vilniaus Mesa in Lithuania, considerably strengthens Atria's Baltic presence and competitiveness in all the three countries - Estonia, Latvia and Lithuania - in order to serve the expanding and consolidating customer industry. Atria's Baltic rim strategy Atria is the market leader in Finland, holding a market share of approximately 25 per cent in the meat business. In addition, Atria's Swedish subsidiary Lithells AB holds a market share of about 25 per cent in Sweden. The Valga acquisition further bolsters Atria's Baltic rim strategy. Atria and its Lithuanian subsidiary Vilniaus Mesa and the Estonian subsidiary Valga will gain a strong position in all the three Baltic countries. Both Vilniaus Mesa and Valga have significant exports to Latvia. In order to proceed further with its internationalisation strategy, Atria is in the process of evaluating its possibilities of entering the Russian market by means of an acquisition. For additional information, contact President Seppo Paatelainen, tel. tel. +358 400 661 742. ATRIA GROUP PLC Seppo Paatelainen President DISTRIBUTION Helsinki Exchanges Principal media www.atria.fi