Berger International withdrawing from Malta

Berger International yesterday announced it would divest its stake in its European subsidiary based in Malta but the factory will still continue to operate.

The management of Berger Paints (Malta), which operates from Hal Far, said, however, that the company would continue operating normally after it reached an agreement with a local consortium.

Berger International, the overseas subsidiary of Asian Paints, has signed an agreement with Vee Gee Bee, its local partner in Malta, to sell off its 84.2 per cent in the company for $1.8 million.

"Our operations in Malta have no strategic fit, as it is our only subsidiary in Europe and its contribution to our group's sales is not significant (two per cent in 2003)," Jalaj Dani, chairman of Berger International, was quoted as saying in India's Financial Express.

Mr Dani said that, furthermore, the paint market in Malta was small and had not been growing in the past few years. It has also been taking up "disproportionate management time" for its size.

Berger International had invested $1.51 million to acquire its 84.2 per cent stake in the subsidiary.

As a result of the divestment, Berger Malta will cease to be a subsidiary of Berger International but Berger International will enter into technical service and trademark agreements with Berger Malta.

Berger International will continue to receive royalties for services provided and the use of its trademark.

When contacted, Berger Paints director Andrew Grech said there would be no changes at the Hal Far plant, which would still be known as Berger Paints (Malta).

He said the consortium believes that BPM has strong potential for growth both locally and abroad. The plans are to grow the business with new products and by venturing into new markets.

He said the agreements with Berger International provide for technical support in product development and quality control.