OREANDA-NEWS. May 07, 2010. A subsidiary of the Norwegian multi-industry group Orkla has signed an agreement for the purchase of the Estonian confectionery maker Kalev Chocolate Factory (KCF) and its cookie and flour mixes segments.

Under the agreement, Orkla acquires 100 percent of the shares of KCF, including its plant in Juri to the south of Tallinn.

In addition to KCF the business segments for the production of cookies and flour mixes in Estonia are part of the deal.

The transaction does not affect companies belonging to Luterma that are nor linked to sweets production. The parties have agreed not to disclose the price.

The buyer in the transaction is Orkla's Finnish holding Felix Abba and the seller the Estonian holding company Luterma. KCF will be part of the Orkla Foods Fenno-Baltic division, which is Orkla Foods Nordic's Finnish-Baltic business.

The transaction is subject to regulatory approval in the respective countries.

Oliver Kruuda, member of KCF's supervisory board, described the transaction as a positive development for KCF. "Felix Abba and Orkla is a strategic buyer with the competence and interest to develop the company and the business further," Kruuda was quoted as saying.

Clas Goran Hagstrom, managing director of Orkla Foods Fenno-Baltic, said the acquisition was an important step in the expansion of Orkla Foods's confectionery business, as it gave it good growth and value creation possibilities in the Estonian market and provided a platform for expanding its confectionery business in Finland and the Baltic region.

The parties hope that the freeze imposed recently by a court on KCF shares will be lifted soon.

"Arresting the shares at a shell company's initiative is a malevolent step, but in life bad will not win," Kruuda commented.

Aripaev reported at the end of April that VS Inkasso, a company set up by businessman Toonart Raask in February, had the assets of the Luterma holdings Kalev, Tere and REC Varad arrested in a bankruptcy lawsuit against Luterma.

The assets that include some of Estonia's largest food companies were arrested on Apr. 23 to serve as security for a claim.

Aripaev said the bankruptcy petition arose from a long-standing dispute between Luterma and its majority owner Oliver Kruuda, and the bankrupt Alta Capital and Indrek Rahumaa, the main figure behind Alta Capital.

Luterma held 100 percent of the shares of KCF through KCF Valdus OU.

Felix Abba is part of the Orkla Foods Fenno-Baltic division, a holding of Orkla Foods Nordic. In addition to Felix Abba, Orkla Foods Fenno-Baltic consists of the Finnish Oy Panda Ab, the Estonian AS Poltsamaa Felix, the Latvian SIA Spilva and the Lithuanian UAB Suslavicius-Felix.
In 2009, Orkla Foods Fenno-Baltic had a turnover of 170 million euros and employed a work force of approximately 800 people. The Orkla group had a turnover of 6.5 billion euros in 2009.

KCF is the leading chocolate and sugar confectionery company in Estonia employing a work force of 400.

It posted a profit of slightly over four million Estonian kroons on sales of 739.8 million kroons for the financial year that started on July 1, 2008 and ended Dec. 31, 2009.