On January 17, 2019, CEE Legal Matters reported that Finland's Caverion Emerging Markets Oy had sold its Czech subsidiary to KART spol., a member of the CEZ Group. We reached out to Ville Ojanen, Caverion's VP Strategy and M&A, for comment.
CEELM: Can you tell us about Caverion Emerging Markets Oy CEE's presence? What CEE markets is the company in, and how does the sale of Caverion Ceska Republika fit into its overall strategy for the region?
V.O.: Caverion EM and the predecessors at widest had a presence in Romania, Hungary, the Czech Republic, Poland, Estonia, Latvia, Lithuania, and Russia. We have systematically focused on the markets where we are in top three to five, i.e., the Central European countries and Scandinavia. As part of that we have been divesting our CEE assets to companies having a stronger presence in CEE and thus more power for developing the operations. Romania and Hungary were divested earlier and recently we agreed to divest from the Czech Republic and Poland. We still have the Baltic States, which are organized under our Finnish operations, and operations in Russia. Caverion Emerging Markets as a company and as a former division is dormant.
CEELM: Which side initiated the talks about this sale? How did the process begin, exactly, and why did you decide to sell off Caverion Ceska Republika?
V.O.: It was our strategic initiative. We hired an advisor for marketing the asset. The decision was part of a larger market strategy.
CEELM: Does Caverion have a legal function? Did it play a role in this sale?
V.O.: We have a legal and governance function at group level and local in-house or external legal advisors in countries. Our group legal is not directly involved in M&A cases, but sets the regulations and assists especially in corporate law related topics.
CEELM: Why did you choose to retain Schoenherr for this matter, and what was its mandate, exactly? Did it handle negotiations, or did you do that by yourself? What was your takeaway of your relationship with the firm in this matter?
V.O.: We have had a strong relationship with Schonherr for more than a decade. We have always been very pleased with their services, especially since we always get the same Austrian partner (Thomas Kulnigg) for our projects and like to use the same local partners every time as well. They have helped in every transaction within the regions they are present -- basically Austria and CEE. They have a pretty straight-forward sell side mandate including all transaction-related legal aspects. We always negotiate together with our partners. Once again they score the max. They are very deal-oriented, but smart. You always get first class service very fast and the costs are perfectly in line with the market averages. We have learned that working with the same legal advisors year after year brings significant synergies. They know our ways of working, they know all the legacy agreements and arrangements, they know our focus points and no-go’s. All this makes the deals smooth and also cost efficient at the end of the day. We prefer in the selection the total cost, not an hourly rate.
CEELM: Schoenherr doesn’t have a presence in the Baltics and Russia. Which firm/firms do you work there with?
V.O.: We have not been active in M&A in these regions since 2003 when those were acquired as part of a much larger deal. Our local companies have their local advisors for corporate law issues and when we have had some internal structurings or other special cases we have mostly used our Finnish legal advisors, such as Castren & Snellman or Hannes Snellman, which have further mandated local companies who they are familiar and confident with.