Finnish meat group Atria Oyj has purchased part of a business belonging to the Spira-group from Sweden's agricultural producers' organisation (LRF) for about €33m (US$32.7m).

The purchase consists of Samfood & Co situated in the Fosie-site in Malmö, the business in Årsta, Stockholm and the convenience food business in Hamnen, Malmö. It also includes the Fosie-site, the machinery, equipment and current assets of all the above mentioned units. In the Malmö Fosie-site the production mainly consists of whole meat products, in Årsta of consumer packed meats and in Malmö Hamnen of the ready meal production of Spira Ready Meal.

In addition to the capital assets and current assets, the purchase includes the trademarks in use, but not loans or other commitments. By the end of the year, turnover for these business activities is expected to be about €140m. There are approximately 600 personnel.

LRF has strongly reorganised its meat business in recent years, concentrating business activities in the above mentioned units since this spring. At the same time it has concentrated solely on the production of meat products, convenience foods and consumer packed meat. Trademarks include among others Goman, Lars Jönsson, Skåne Erik, Samfood and chains in street kitchen business Fyrkanten and Sammy's. Samfood & Co has been unprofitable. The processes purchased have in effect been concentrated in two main places, and thereby opportunities for rational and profitable business have been created.

Atria seeks to grow in Sweden

Atria Oyj is the biggest meat company in Finland, with a turnover of €637m in 2001. About 30% of turnover has come from Sweden, where Atria has owned Lithells from the end of 1997. Lithells's business consists of the Atria Lithells producing meat products, the fast food chain Atria Concept and Svensk Snabbmat för Storkök, engaged in wholesale trade over short distances. This year the Lithells group turnover is expected to rise to slightly over €210m. This year Lithells's trading has grown strongly and the productivity development has been positive.

The Atria group's strategic aim has been to further internationalise its business activities in nearby areas. In Sweden, Atria's aim is to reach a strong market position in the retail trade and catering business, which in practice means either market leadership or the second strongest position in the market after Swedish Meats, the Swedish co-operative abattoir organisation. In particular, the objective has been to concentrate on the production of meat products, on the other hand butchery has not interested Atria in Sweden. By strengthening its position in Sweden, Atria believes it can best satisfy the needs of increasingly international retail chains. At the same time, by increasing the degree of processing, Atria believes it can best capitalise on the chances of meat production in Finland, thereby securing the viability of the whole chain.

Lithells is bigger than ever before

The purchase of business activities is made by Lithells. In practice, the aim is, with the co-operation of Lithells and the newly bought businesses, to form a market position, which in most main product groups means a market share of about 20%. Atria calculates that it will achieve significant synergy profits between Lithells and the acquired businesses, and will thereby be able to profitably expand its business. The personnel of the acquired industrial units will transfer to the new owner, but a great part of the senior managerial staff will remain in the service of the LRF owned Spira.

This way the advantages of co-operation between Lithells and the newly bought businesses are to emerge as soon as possible.

The negotiations between Atria Oyj and LRF have included the stock exchange company Sardus AB's 34% share of stocks. This, like other business activities owned by LRF, does not belong to the purchase negotiated at present.

After the deal has been completed, Atria's Swedish business will be worth slightly over €360m. Atria believes that it has an opportunity to further develop its Swedish business to the level of about €400-500m, which may mean more business purchases.