Over the past few years CMS advised the OTP Bank Group on an extensive series of acquisitions across Bulgaria, Moldova, and former Yugoslavia. This series of separate deals was shortlisted for CEE Legal Matters’ CEE Deal of the Year in each of the countries involved, actually winning the 2018 Deal of the Year for Bulgaria and the 2019 Deal of the Year Award for Montenegro. We reached out to Eva Talmacsi, who led CMS’s multi-jurisdictional team, to learn more about the firm’s impressive work on OTP’s behalf.
CEELM: First, congratulations, Eva, on your firm’s work on this astounding series of transactions, which were widely recognized, and won multiple CEE Deal of the Year Awards this year and last. Well done!
Eva: Thanks very much David – we were delighted with the recent wins at the CEELM DOTY awards, and that all the hard work on this suite of transactions is being recognized so widely. As you say, quite an astonishing deal series to have supported OTP Bank Group on – and exactly the kind of work that CMS’ DNA suits: cross-border, multi-country, complex, and high-profile. Plus, it is great to be supporting one of the region’s fastest growing power-houses and taking their business to the next level! In short, CMS assisted OTP Bank Group on a suite of strategic acquisitions across the region, acquiring Societe Generale Group’s Bulgarian, Albanian, Croatian, Moldovan, Montenegrin, Serbian, and Slovenian subsidiaries.
CEELM: Can you describe the various deals in their particulars, so we understand everything?
Eva: There were six deals in total, and I’ll outline the particulars of each one.
This project included the direct or indirect sale by Societe Generale of its Bulgarian subsidiary interests (Societe Generale Expressbank AD, Societe Generale Factoring EOOD, Sogelease Bulgaria EOOD, and Sogelife Bulgaria IJSC) to DSK Bank EAD, a member of the Budapest Headquartered OTP Group.
The transaction documents were signed on August 1, 2018, at CMS’ Budapest office. The closing of the bank acquisition, as well as the purchase of the insurance company, was subject to the fulfilment of several conditions, which included obtaining regulatory approvals in Bulgaria and in Hungary as well as competition clearances in Bulgaria, Serbia, Montenegro, and Ukraine. The transaction closed on January 15, 2019 in Sofia – and its significance was recognized with an award at the 2019 CEE Legal Matters Awards.
This project involved Societe Generale selling its 100% shareholding in Banka Societe Generale Albania SHA, the Albanian bank of the SG Group, to OTP Nyrt. At the time of signing, 88.89% of the shares in Banka Societe Generale Albania SHA were owned by Societe Generale while the remainder were owned by minority shareholders. Therefore, the acquisition occurred in two parts.
For the sale and purchase of the 88.89% shareholding in Banka Societe Generale Albania SHA, a share purchase agreement was executed on August 1, 2018, in CMS’ Budapest office. In the interim period (i.e. between signing and closing) Societe Generale acquired the remainder of the shares from the minority shareholders, which it then sold to OTP Nyrt.
The closing of the transaction was subject to the fulfilment of several conditions, which included obtaining regulatory approvals in Albania and in Hungary as well as competition clearances in Albania, Serbia, Montenegro, and Ukraine. The acquisition of all the shares closed on March 28, 2019 in Tirana. Accordingly, on that date, OTP Nyrt. acquired a 100% shareholding in Banka Societe Generale Albania SHA.
This project included the direct or indirect sale by Societe Generale of its Serbian subsidiary interests (Societe Generale Banka Srbija AD Beograd and Sogelease Srbija d.o.o.), as well as the sale by SG Group of its Serbian insurance company (Societe Generale Osiguranje ADO Beograd) to OTP Nyrt. The transaction documents were all signed on December 19, 2018 in CMS’ Budapest office. The closing of the bank acquisition, as well as the purchase of the insurance company, were subject to the fulfilment of several conditions, including obtaining regulatory approvals in Serbia and in Hungary as well as competition clearances in Serbia, Montenegro, and Ukraine. The transaction closed on September 24, 2019 in Belgrade.
In this project, Societe Generale sold its 67.85003% shareholding in Banca Comercialia Mobiasbanca – Groupe Societe Generale S.A. (“Mobiasbanca”), the Moldavan bank of the SG Group, to OTP Nyrt. Societe Generale also sold its 8.84151% shareholding in Mobiasbanca, which was acquired from the EBRD in the interim period. For the purpose of the sale and purchase, a share purchase agreement was executed by Societe Generale as seller and OTP Nyrt. as purchaser.
As part of this project, the Romanian Bank of SG also sold its 20% shareholding in Mobiasbanca to OTP Nyrt. in a separate short sale agreement. All transaction documents were signed on February 5, 2019 in CMS’ Budapest office. The closing was subject to the fulfilment of several conditions, including the obtaining of regulatory approvals in Moldavia and Hungary as well as competition clearances in Serbia, Montenegro, and Ukraine. The deal closed on July 25, 2019 in Chisinau.
As Mobiasbanca was a public interest company, following the closing of the main transaction, OTP Nyrt. was obliged to launch a mandatory tender offer for the acquisition of the remaining shares of Mobiasbanca that it had not acquired from Societe Generale and the EBRD.
In this project, Societe Generale sold its 90.5578%% shareholding in Societe Generale Banka Montenegro A.D., the Montenegrin bank of the SG Group, to Crnogorska Komercijalna Banka AD, a member of the Budapest-headquartered OTP Group.
The transaction documents were signed on February 27, 2019 in CMS’ Budapest office. The closing of the share purchase agreement was subject to the fulfilment of several conditions, including obtaining regulatory approvals in Montenegro and in Hungary as well as competition clearances in Serbia, Montenegro, and Ukraine. The share purchase deal closed on July 15, 2019 in Podgorica.
As the shares of Societe Generale Banka Montenegro A.D. were listed on the Montenegrin Stock Exchange, following the closing of the deal, Crnogorska Komercijalna Banka AD was obliged to launch a mandatory tender offer for the acquisition of the remaining shares of Societe Generale Banka Montenegro A.D. not acquired from Societe Generale in the course of the project.
The significance of the transaction was recognized with an award by CEE Legal Matters in April 2020.
Finally, this project included the direct or indirect sale by Societe Generale of its Slovenian subsidiary interests (SKB Banka d.d. Ljubljana, SKB Leasing d.o.o., SKB Leasing Select d.o.o.) to OTP Nyrt. The transaction documents were signed on May 2, 2019 in CMS’ Budapest office. The closing was subject to the fulfilment of several conditions, including obtaining regulatory approval of ECB and of NBH in Hungary as well as competition clearances in Slovenia, Serbia, Montenegro, Ukraine, and Albania. The deal closed on December 13, 2019 in Ljubljana.
CEELM: Were all the deals agreed-upon at the same time, as part of one entire deal, then negotiated and completed separately, or were they conceptualized, pursued, and completed separately?
Eva: Each deal had its own transaction process and negotiation, although the transaction documents signed for all six deals were similarly structured from both a business and legal perspective. In each country, the transaction documents were adapted depending on the relevant governing law and local law, capital market rules (where applicable), and market practice applicable to the operation of the relevant target entity and further transaction-specific issues and material due diligence findings.
CEELM: How do these deals fit into OTP’s overall regional strategy/plan?
Eva: We understand that the OTP Group’s acquisition strategy is determined by seeking acquisition opportunities that will allow the banking group to achieve the optimal size. With a primary focus on CEE & SEE, OTP Bank has been one of the most active financial institutions in the European acquisition market for quite some time.
As previously mentioned by representatives of OTP Group in various interviews, the strategic goal of OTP Group is to become the most successful universal banking group in Central and Eastern / SEE Europe by increasing its overall market share through organic growth and acquisitions across the region such as the acquisition of Societe Generale interests across SEE. OTP has gained comprehensive and in-depth market knowledge during the nearly two decades since its first acquisition in SEE and has learned how to implement a sustainable business model across its ever-increasing group to deliver profit and growth while maintaining stability in terms of portfolio quality, capital, and liquidity position.
CEELM: Why was CMS retained by OTP Bank to help make the deals happen, and what was the nature of the firm’s assistance?
Eva: CMS was selected by OTP Bank after a legal tender process to provide legal due diligence and transaction advisory services. CMS has advised OTP Group on its expansion in Central and South-East Europe over the past 15 years and assisted on various successful acquisitions.
CEELM: Who led OTP’s In-House Team, and what was your relationship with them like?
Eva: OTP’s in-house team was led by the core M&A team consisting of Gabor Kolics (Managing Director), Balazs Letay (Director), Anna Reka Nagy (Senior Manager), and Orsolya Barbay (Senior Manager), with the overall project overseen by Laszlo Wolf (Deputy CEO). The wider OTP team included experts from relevant departments across the group and senior management of the local subsidiary banks and interests. As one would expect in respect of a project of this scale, there was a large in-house team involved in each and every transaction.
We have worked with the OTP team on numerous occasions and have witnessed first-hand OTP Group’s impressive growth into the significant European financial institution that it is today. OTP’s M&A and wider team are a pleasure to work with and have always impressed us with their professionalism and dedication.
CEELM: How was CMS’s team organized and structured, and who all was on it?
Eva: This significant multi-jurisdictional and multi-disciplinary project involved six transactions over the two-year lifespan of these mandates, and – together with the first transaction (the acquisition of Splitska Banka in 2017) – seven transactions over three years. As client relationship and lead matter partner, I led the project with invaluable support from the core CMS transaction team, as well as from the wider CMS team and our Moldovan local counsel advising on the relevant local law issues.
The core CMS transaction team for the full suite of deals was based in our Budapest office and included Zoltan Poronyi (senior associate, corporate) and Dora Czegledi (senior associate, corporate) with senior support from Aniko Kircsi (partner, head of corporate), Dora Petranyi (partner, head of competition), Szabolcs Szendro (senior counsel, competition) and Dora Altziebler (trainee lawyer, competition) as well as Erika Papp (co-relationship partner and head of banking) and additional members of the wider corporate and banking teams in Hungary.
We worked with our excellent teams on the ground for each of the transactions – a real multi-jurisdictional team effort across our Sofia, Kyiv, Zurich, Belgrade, Montenegro, Zagreb, Ljubljana, Bucharest, and Tirana offices, doing what CMS does best! We were also supported with excellent local law advice in the Republic of Moldova from the Turcan Cazac Law Firm.
CMS is well-positioned to take on a project of this scale, as the firm has extensive expertise in advising as lead transaction counsel in multi-jurisdictional and cross-border M&A transactions in the financial services and in other sectors, as well as an appropriate depth and breadth of resource across Europe including CEE to ensure end-to-end delivery for international transactions. The success of the project also required continuous and well-oiled channels of coordination and communication with the client, the co-advisers, authorities, third party stakeholders as well as with the sell-side and its legal advisers. This was an essential component to the success of each transaction.
It’s been a real privilege to assist OTP Group on this major project and we wish the expanded group the very best in the months and years to come.