Vivartia has signed an acquisition agreement that should see it acquire a 58% stake in Greek dairy group Mevgal.

In a statement, Vivartia – Greece’s largest food group – said that it had signed the agreement with the Papadakis-Chatzitheodorou family, which holds a 43% stake in Mevgal.

When combined with an existing agreement with the family of Mary Hatzakou, Vivartia will hold at least 57.8% of Mevgal through its 100% subsidiary Delta Foods. The deals are subject to authorisation by the competition commission.

The company said that the acquisition will be completed in two phases. Firstly Delta Foods will acquire 14.8% of Mevgal from the family of Mary Hatzakou for approximately EUR19.6m (US$25.1m), while the latter will retain a put option on Vivartia for a further 13.6% stake. Secondly, Delta Foods will acquire an additional 43% from the Papadaki-Chatzitheodorou family at the price of EUR57m.

The agreement gives the Papadakis-Chatzitheodorou family the right of a minority participation in the new partnership.

Mevgal is the number one dairy company in Northern Greece. Its turnover in 2009 amounted to EUR184m and EBITDA reached close to EUR11m.

The company created by the merger will boast total combined sales of EUR640m, of which approximately EUR500m will be in Greece, with the remaining EUR140m from abroad.

The statement said it will be able to leverage the synergies in both in sales and distribution networks, as well as in supply chain and production of products. The expected synergies are expected to reach, over a three year period, EUR23m on an annual basis.

Dionysios Malamatinas, CEO of Vivartia Holdings said: “We are very pleased with the acquisition agreement with Mevgal, a renowned company in the Greek dairy industry with a truly long history and significant presence. Our goal is to give greater value to the new partnership and to our consumers the benefits of creating a national champion, while maintaining the course of growth, innovation and quality that characterises both companies. This new business combination has the ability to overcome the current competitive challenges and is expected to contribute significantly to the maintenance as well as to the strengthening and development of Greek farming and the economy of our country.”

The president of Mevgal, Petros Papadakis, said: “Amidst highly competitive conditions, the sector is now ripe for partnerships and a combination of forces in order to face growing consumer demands, challenges of the domestic market and growth opportunities in Southeastern Europe. These conditions demand increasingly stronger and more competitive formats.”