Itikka’s and Lihakunta’s leaders estimated as early as the mid-1980s that joining forces would make sense for meat producers and co-operatives. Restrictions to trade were being removed and competition was opening up and intensifying both in Finland and the rest of Europe. In order to succeed in this new situation, Itikka and Lihakunta would need to increase the efficiency of their slaughterhouses and find new markets for meat products in Southern Finland, and potentially outside Finland.
The merger project is accelerated after the incorporation of the co-operatives’ slaughterhouses in 1988. The keenest advocates and implementers of the merger are the same men who promoted the founding of the limited companies: Itikka’s managing director Seppo Paatelainen and chairman Reino Penttilä and Lihakunta’s managing director Paavo Jauhiainen.
The merger takes place in autumn 1990. Itikka-Lihapolar Oy, Finland’s largest meat sector company, is created. It purchases more than 40 per cent of the meat produced by co-operative slaughterhouses, and its share of the meat products sold in the market is about one fifth. The company employs 2,200 people. Seppo Paatelainen is elected CEO and Paavo Jauhiainen deputy CEO.
The meat company is further reinforced when it acquires Pohjanmaan Liha Oy, which operates on the Ostrobothnian coast. Itikka-Lihapolar goes public in summer 1991.
The merger shakes the power structures in the meat industry and causes a great public debate, the tone of which is mostly positive.
“We can be proud that in this country where it is customary to resist change and say that time is not ripe yet we have leaders who are able to make decisions and act” describes the editorial of Pellervo, a co-operative magazine.
“It (the merger) was a shock to TLK and LSO, above all. They knew they were up against a major protester,” says CEO Seppo Paatelainen in an interview with Kauppalehti, a financial newspaper.
LSO, a co-operative of south-western meat producers, and its slaughterhouse company is Itikka-Lihapolar’s main competitor in Southern Finland. Tuottajain Lihakeskuskunta (TLK), the central organisation owned jointly by the co-operatives, also becomes a competitor to Itikka-Lihapolar and the other co-operatives: over the years, TLK has developed its own industrial operations and was planning to build a large meat processing plant in Vantaa – concurrently with the construction of Itikka-Lihapolar’s massive food factory in Nurmo.
Seppo Paatelainen, Reino Penttilä and Paavo Jauhiainen were the contributors to the co-operatives’ decision to dismantle TLK later in 1991.