Although the number of share-transfer transactions has fallen over the past five years, part of the public is viewing the context of several newly announced and completed deals with unease.
Research by SIA “Lursoft IT” shows that in the first two months of 2025 only 753 limited liability companies (SIA) saw at least 50% of their shareholder base change, whereas in the same period in 2021, before the active phase of the war in Ukraine, such transactions took place in 1027 SIAs. The number of SIAs whose shareholder base changed over the course of a year has also fallen by at least 50%, namely from 5374 in 2021 to 4483 in 2024.
Ainars Brūvelis, member of the board of SIA “Lursoft IT”, points out that trends in changes of share ownership in Latvia are relatively stable, even as the numbers shrink. Each year at least 50% of the shares are disposed of (change hands) in 3-5% of the total number of companies that have not been liquidated. The reasons can vary.
“The most common patterns are companies set up for sale – both simply as ‘shells’ and in order to carry out, for example, real-estate transactions (selling notional shares of flats in a ‘management company’ once the building has been completed) – and ‘start-ups’, whose aim is to attract capital to realise a promising idea and then be sold on. Inheritance of companies is also a fairly frequent route – the oldest companies in Latvia that have not been liquidated are already more than 30 years old, which means that entrepreneurs who were young when they founded them are now approaching retirement age, while in certain sectors – especially those linked to agriculture – the age of the founders passed retirement age long ago. The geopolitical situation has certainly left its mark too – Russia's invasion and the placing of Russian and Belarusian citizens on sanctions lists forced them to look for temporary solutions (a nominal change of owner) or genuine ones for companies that were trading successfully (although a great many were simply liquidated). Then there are ‘other reasons’, for example ‘Rimi’, ‘Södra’ and so on,” explains A. Brūvelis, noting that foreign capital flows are characterised by the “number of transactions (operations)” – how many changes have occurred in a given year in connection with the investments of a particular country's companies or beneficial owners (investment, sale and the like).
A change of owners for the sector's heavyweights
Significant changes of shareholders have already reached the forestry sector, and several other striking deals are expected to be announced before long. Already made public is the transaction by the timber trading company SIA “ACA Timber”, as a result of which it has acquired 100% of the shares in the forestry and timber trading company SIA “Metsä Forest Latvia” from “Metsäliitto Cooperative”, the parent company of Finland's “Metsä Group”. “ACA Timber” is a Latvian/Swedish/German corporation owned by Armands Apfelbaums (Latvia), “Virke Impex AB” (Sweden) and “Claus Rodenberg Waldkontor” Gmbh (Germany).
Very recently the Swedish company “Bergs Timber” sold 100% of the shares in sawn timber producer SIA “Vika Wood” to the Austrian company “Nextwood One”, which is part of the Europe-wide enterprise “HS Timber Group”. At the same time, various audiences are discussing the wish of “Södra”, Sweden's largest forest owners' cooperative, to sell the forests and land of around 135 000 ha it acquired in Latvia in 2018, which amounts to roughly 2% of Latvia's entire territory.
The Green Deal outweighs geopolitics
“These are by no means all the transactions involving shares in large companies that matter to the sector, because there are further deals that have to be approved by the competition authorities, and the wider public knows nothing about them at all,” says Kristaps Klauss, vice-president of the Latvian Forest Industry Federation, assessing the situation and stressing that buying and selling shares is nothing unique, because it has always happened, still happens and always will.
“At least in transactions involving the large companies, I do not see changes in the geopolitical situation as the reason,” K. Klauss replies when asked whether activity on the share market is not connected with the region's geopolitical situation. He backs this up by pointing out that major transactions to sell or buy company shares are prepared over several years.
“There are companies whose shares belonged to one set of foreigners and now belong to another. Of course, shares in locally owned companies are also being sold; in these cases one would need to understand the reasons for the owners acting in this way,” K. Klauss explains. He notes that these can be, and indeed are, based both on forecasts of future development and on personal considerations.
“If a company's owner (or owners) are of a venerable age and are no longer able or willing to take risks and engage in business, transactions involving shares are logical and understandable,” K. Klauss explains. He does, however, point to a further factor, namely that the continued growth of locally owned companies requires substantial resources, which most domestic company owners do not have, while at the same time they have to compete on the product market with very large, even enormous, companies.
“If you look at what kind of companies (with what turnover and profit) are represented in the European association of any given sector, it is logical that sooner or later they will be represented in Latvia, if they are not already,” K. Klauss concludes, citing the EU Green Deal as another significant factor in the sale of shares.
“There are plenty of assumptions, speculations and forecasts, but nobody has repealed the Green Deal requirements in Europe or extended the deadlines for implementing them. That frightens locally owned companies even more than the growth in geopolitical risk,” says K. Klauss. In his view, the Green Deal is a far more significant risk factor for Latvia's land-use sectors than geopolitics: “What good are technologies and production equipment if access to timber or other resources is reduced? They are worth scrap value, and both the entrepreneurs themselves and potential lenders – the banks – understand that very well.”
Big deals – the prerogative of foreigners
A deal that is very substantial by Latvian standards has just been made public, in which Sweden's “ICA Gruppen” and the Danish retail company “Salling Group” have agreed on a price for the sale of the retailer “Rimi Baltic” – 1.3 billion euros, excluding debt.
“The sum probably will not be that large, but “Södra”'s properties in Latvia will most likely also be bought by some foreign company, which will pay more than half a billion euros for them, because Latvia does not have the resources that could return 135 000 ha of land to Latvian ownership,” K. Klauss replies when asked whether locally owned companies could carry out the purchase of the “Södra” lands. In his view, share transactions have always existed, still do and always will, and they should be treated as part of normal economic activity.