Saint-Gobain’s Acquisition of Revco Hungary
CEE Attorneys advised Revco Hungary, a producer of plasters, paints and coatings, on its sale to Saint-Gobain. Noerr advised the buyer.
Revco Hungary primarily produces plasters and paints in buckets. The company also produces footing products, glazes, primers and surface treatment materials. Saint-Gobain is a producer of construction and other materials. The merger is expected to expand Saint-Gobain’s portfolio of indoor and outdoor systems and solutions in Hungary and elsewhere in Europe, in addition to broadening its product range.
CEE Attorneys advised Revco Hungary with a team led by partner Aliz David and including partner Tamas Felsmann and senior associate Erika Sukosd.
An Interview with Aliz David at CEE Attorneys
Can you share more about the role that you and your team played during this sale?
The client’s Dutch consultants contacted us about the sale of the Hungarian company months before the specific legal transaction. The family-owned company in the Netherlands decided to sell the Hungarian subsidiary. Our task was first to evaluate the incoming offers from a legal point of view and the Hungarian legal review of the Letters of Intent from the seller’s side and also to provide tax advice regarding the sale.
Later on, our task was to facilitate the agreement on the conditions of sale for the Hungarian company, to prepare the company for handover, to assist the prerequisites for the fulfilment of the closing conditions by the seller and the company in the sales contract, and to cooperate with the buyer’s representative in the necessary licensing procedures. The cooperation with the buyer’s representative was smooth and friendly throughout, which is very important in the case of such a complex legal transaction.
What were the key legal and market considerations that had to be taken into account?
Considering that, on the one hand, according to the current Hungarian regulations, a ministerial license is required for similar sales and purchases, and due to the identity and the market position of the companies the permission of the Hungarian Competition Office is a must, it was necessary to prepare for a longer transition period from the signing of the contract to the closing of the deal, so ensuring this transition period was a significant issue.
During this period, the operation and management of the company had to comply with the conditions stipulated by the parties, while due to the enforcement of the primary interests of the seller, the buyer’s guarantees had to be available as well. Numerous conditions had to be fulfilled at the time of closing the deal, so in fact the most part of the work came only after the signing of the sales contract.
On the other hand, it was an important aspect that the affected market is considered a seasonal market, so the parties had to develop a balanced but relatively complicated structure regarding the financial items to be calculated during the closing. A significant factor was also the fact that REVCO Hungary is an old, patinated company. To ensure the preservation of the company’s value, it was obviously necessary to attach special importance to the fact that the company’s employees and partners were impacted as little as possible from the changes, could continue to work in a suitable working environment, and partners could continue their business partnership as usual. We feel that all these were successfully implemented together with Noerr’s lawyers and economic consultants.
The cooperation with the buyer’s representative was smooth and friendly throughout, which is very important in the case of such a complex legal transaction.
Did you encounter any major obstacles in the course of this transaction? If so, how did you overcome them?
On the one hand, obtaining the license from the competition office was a longer than average process and perhaps more complicated, but this was primarily one of Noerr’s tasks. On the other hand, it was of particular importance that the sales structure of Revco and Saint-Gobain is fundamentally different, so the subsidiaries partially owned by Revco Hungary, which previously played a significant role in foreign sales, had to be removed from Revco’s ownership and the agreements regulating sales, and the subsidiaries provided with a trademark rights had to be transformed. Thus, during long negotiations with the minority owners of these companies, it was necessary to find an agreement suitable for all partners, and then to implement the content of these agreements properly according to the legal systems of the various countries.
On the one hand, this was achieved with the help and cooperation of CEE Attorneys and the Romanian and Slovak law offices of CEE Attorneys and Noerr. Considering that the closing of the legal transaction took place almost a year after the signing of the sales contract, of course the cooperation required flexibility and insight on the part of all parties during the transitional months. All in all, it was a complex, but at the same time very nice task from a legal point of view, and we are glad that the legal transaction was concluded successfully and to the satisfaction of the parties.