28
Thu, Mar
51 New Articles

Inside Out: Wiener Privatbank Acquires Valartis

Interviews
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

The Deal:

On February 18, 2016, CEE Legal Matters reported that DLA Piper Weiss-Tessbach and Baker & McKenzie Diwok Hermann Petsche had advised on Wiener Privatbank’s acquisition of the Austrian business of the private bank Valartis. The transaction was described by DLA Piper Weiss-Tessbach as “the largest banking transaction in Austria in the year 2015.”

The Players 

  •  Georg Diwok, Partner, Baker & McKenzie Diwok Hermann Petsche 
  •  David Christian Bauer, Partner, DLA Piper Weiss-Tessbach

CEELM:

How did you each – and your firms – become involved in the deal?

David Christian Bauer (DCB): We were involved through our contact to the chairman of the board, Dr. Kranebitter. I have advised him in the past on various issues. Further, we had also had previous contact to the bank’s legal department.

George Diwok (GD): B&M has worked for Valartis Bank (Austria) AG before. At first, a direct mandate by Valartis Bank (Austria) AG to B&M for the sale was contemplated. However, the board accepted Baker & McKenzie’s advice that it would be prudent to have separate law firms representing each of the interested parties: 

  • Shareholders (direct and indirect) B&M
  • the bank itself Doralt Seist Csoklich (Christoph Diregger)
  • the board members (at least in the regulatory proceedings: Wolf Theiss)
  • the transaction lawyers (Doralt Seist Csoklich supported by B&M on the side of the sellers as well as DLA on the side of the buyer).
  • For a while it was not clear whether there would be a share or an asset deal, therefore B&M and DSC worked hand in hand.

CEELM:

At what stage were you brought on board, and what, exactly, was your mandate when you were retained (as compared to the final result)?

DCB: From the start, DLA Piper was hired to help guide the deal to completion. Everything else developed through the course of the transaction. Negotiations had not started in earnest before we were involved but of course several talks on the management level had already taken place before that.

GD: We were there right from the beginning – specifically, as long as the share deal structure was contemplated. That structure did not materialize to regulatory constraints, and with the consent of the Austrian regulator Financial Market Authority (the FMA) an asset deal structure was adopted (instead of the usual share deal) so as not be reliant on the approval of the FMA or ECB. 

CEELM:

Who were the members of your team, and what were their individual responsibilities?

DCB: The transaction was led by myself (corporate and banking law) together with Partner Christian Temmel (capital markets law) and further included Counsel Johanna Holtl (corporate law). Further, of course we had a huge due diligence team, which consisted of around 15 persons and was supervised by me. In addition, partners supervised their associates with regard to their area of specializations.

GD: I was the partner on the deal and responsible for the regulatory work and the negotiations. I was supported by fellow Baker & McKenzie Corporate Partner Wendelin Ettmayer, who was responsible for all questions regarding the board or the shareholders. Our Banking & Finance Associate Andrea Eigner and Corporate Junior Associate Armin Assadi helped as well.

CEELM:

Please describe the final deal and your involvement in it in as much detail as possible – in other words, how was the final deal structured, and how did you help it get there?

DCB: In the course of the transaction Wiener Privatbank acquired the Austrian business of Valartis Bank. In the process of the deal-structuring, various regulatory requirements had to be considered. Since neither a share deal, nor the set-up as a reorganization were accepted by the Austrian Financial Markets Authority (FMA) due to reasons relating to the owners of Valartis, an alternative had to be found. Finally, an asset deal (singular succession) was chosen. An asset deal is the purchase of a company by buying all or some of its individual assets (claims, real estate, furniture, cash) instead of its stock. In this case the transfer was performed by way of singular succession, meaning that all assets were valued and transferred individually. The regulatory reason why this was done like this is completely unique to this case because the Austrian regulator did not want a structure where there would be a risk of future involvement of the owners of Valartis due to their (published) financial issues in Switzerland.

The matter also included a comprehensive legal due diligence and the preparation of the annual general meeting. We are now also involved in the issuing of a convertible bond.

GD: The deal was finally structured as an asset deal as that did not involve obtaining a consent by the regulator – the FMA – and also not by the ECB. Finally, the decision upon the structure allowed a quicker process and was supported by the FMA.

CEELM:

What would you describe as the most challenging or frustrating part of the process?

DCB: I would say the repeatedly changing regulatory requirements - in conjunction with a tight time frame - were a substantial challenge for everybody involved. Further, the structure as asset deal posed additional difficulties.

The tight time frame was imposed by the Austrian regulator (FMA). Due to the fact that an asset deal structure requires the transfer of every single asset and allows for difficult exclusions of liability, it is in reality a very complex and time consuming structure, since every single asset together with respective contractual and other legal relationships, has to be included in the purchase agreement at least by category and must be transferred “piece by piece.”

CEELM:

Did the final result match your initial mandate, or did it change/transform somehow from what was initially anticipated?

DCB: It changed insofar as the first approach envisaged different alternatives of share deals, which were not possible for regulatory reasons relating to the owners of Valartis Bank (Austria).

CEELM:

How would you describe the working relationship with your clients? 

DCB: Johannes Kunz, General Counsel at Wiener Privatbank, was directly involved at all stages from an inhouse legal perspective. The two managing directors, Dr. Helmut Hardt and Eduard Berger, as well as Dr. Gottwald Kranebitter as chairman of the supervisory board, were present at most of the negotiations with Valartis. Cooperation was smooth and very professional, and we communicated on a constant basis. 

GD: The working relationship with the client was intense and trustful. Gerald Scheweder and Florian Keschmann, the managing directors of the Austrian holdings, were intensely and regularly involved, with Gerald Scheweder taking the lead.

CEELM:

How would you describe the working relationship with your counterparts on the deal?

DCB: The working relationship with Baker & McKenzie was professional, intensive, and pleasant. 

GD: The relationship was very professional and constructive, although – as in each negotiated deal – at times intense. We hold David Bauer in high regard.

CEELM:

How would you describe the significance of the deal in Austria, or in the region? 

DCB: Given its complexity and final set-up, this transaction was without a doubt the biggest banking deal in Austria in 2015. It perfectly reflects the enormous challenges – increasingly strict and sophisticated regulatory requirements – which banks are currently facing on the market. I would say the way in which the transaction was constructed and completed can truly be called state of the art. Everybody involved agreed that this was the most challenging deal of their career. We are therefore very proud to have achieved such a satisfying result!

GD: B&M in Austria has special knowledge on the silent liquidation of banking operations in Austria. We have done two comparable transactions already. We do not think that this is a one off as the regulator constantly tries to reduce the number of regulated entities in Austria, as the country is a heavily overbanked market.

Editor’s Note: It was announced on April 1, 2016, that Wiener Privatbank had resold Valartis Asset Management (Austria) Kapitalanlagegesellschaft m.b.H. to Semper Constantia Privatbank AG for an undisclosed price.

This Article was originally published in Issue 3.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Our Latest Issue