Sun, Jan
60 New Articles

Inside Out: SBB’s Acquisition of EUnet


The Deal:

On April 30, 2015, the CEE Legal Matters website reported that Karanovic & Nikolic and Vukovic & Partners had advised on Serbia Broadband’s acquisition of EUnet. EUnet continued to operate independently after the acquisition, but promised to “offer improved service and an integrated IT-Communication solution to customers.” The two companies announced plans to unite services and offer an integrated platform for cloud hosting, Internet, landline telephone service, and customer service.

The Players

  • Mirjana Rosic, CEO Of EUNet 
  • Rastko Petakovic, Partner, Karanovic & Nikolic (K&N): External Counsel for Serbia Broadband (SBB)
  • Srdjan Gligo, Partner, Vukovic & Partners (“VP”): External Counsel for EUNet


How did you become involved in the deal?

Rastko Petakovic (K&N): Karanovic & Nikolic has been working with Serbia Broadband for several years, covering deals in different jurisdictions and from various legal areas (corporate, competition etc.). Through our professional approach and fruitful and successful cooperation in previous deals, Serbia Broadband developed a close relationship with Karanovic & Nikolic, recognizing that we have the necessary capacity, knowledge, and experience to realize this important deal for it.

Srdjan Gligo (VP): We have provided legal services to EUnet since our law firm was established and this long-term business engagement provides a good foundation for mutual trust. I have led many previous projects of EUnet, in which they were satisfied.

Mirjana Rosic (EUnet): EUnet has a long term professional relationship with Vukovic and Partners, since they provide us legal services considering every legal matter in our business affairs. So we were confident that Vukovic and Partners would represent us competently.


When you were retained, what was the scope of your assignment? What, exactly, were you asked to do?

Rastko Petakovic (K&N): Our assignment began with drafting a Memorandum of Under-standing which was concluded between the parties to the deal. The MoU covered key terms of the upcoming transaction. Following the signing of the MoU, we analyzed documentation of the target company and prepared a legal due diligence report, covering all legal areas relevant to the transaction, such as, inter alia, corporate, banking and finance, competition, real estate, IP/IT, insurance, and disputes. Once the legal due diligence report was prepared and reviewed by the client, the next step was to engage in the negotiations process with the sell side and their legal counsel. The negotiations mostly concerned the transaction documents and payment mechanism. Karanovic & Nikolic drafted all transaction documents, the most important of which was the Share Purchase Agreement (including representation and warranties and Transfer Deed). Finally, following the conclusion of the SPA and Transfer Deed, Karanovic & Nikolic was engaged in the transaction closing, i.e., the registration of Serbia Broadband as the new majority shareholder of EUnet with the Serbian Business Registers Agency.

Srdjan Gligo (VP): The scope of our assignment was to counsel the client during the negotiations, to analyze the proposal of the other side, to offer suggestions for changes of the proposal, to determine which documents EUnet should prepare and disclose under the terms set by SBB (and coordinate the preparation of the documentation by EUnet’s em-ployees).To be honest, our counterparts at K&N had much more difficult task, as is usual for the attorneys that advise the buyer.

Mirjana Rosic (EUnet): As I mentioned before, cooperation between EUnet and Vukovic and Partners has been ongoing for years now and we have worked with both Dejan Vukovic and Srdjan Gligo previously and on different issues, as they take care of all legal matters of our company.

We – and the Certus Consulting company – were responsible for the technical and financial parts of the process, while Vukovic and Partners were responsible for legal matters and considerations.


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

Rastko Petakovic (K&N): The following Karanovic & Nikolic lawyers were engaged in the deal, covering the following areas: Rastko Petakovic, Partner: I led the transaction from its very beginning and was engaged in drafting of the MoU, preparing the legal due diligence report, negotiating with the seller’s side, and the closing of the transaction; Bojana Miljanovic, Senior Associate, worked on a legal due diligence report covering competition-related issues and material agreements; Katarina Guduric, Senior Associate, worked on a legal due diligence report covering banking and finance issues; Mirko Kovac, Senior Associate, worked on a legal due diligence report covering employment and health and safety at work issues; Marko Matovic, Associate, worked on a legal due diligence report covering environmental and dispute resolution related issues; Srdjan Dabetic, Associate, was engaged in the preparation of the MoU, the drafting of a legal due diligence report covering corporate and insurance issues, negotiations with the seller’s side, drafting transaction documents, and closing of the transaction (i.e., the registration of Serbia Broadband as the new majority shareholder of EUnet with the Business Registers Agency);Veljko Smiljanic, Associate, worked on a legal due diligence report covering competition and regulatory issues as well as material agreements; and Milan Radonjic, Associate, worked on a legal due diligence report covering real estate issues.

Srdjan Gligo (VP): The members of our team that worked most closely on this deal were: Dejan Vukovic, Predrag Miladinovic, and me.


What does the final deal look like, and how did your team help it get there?

Rastko Petakovic (K&N): Our work on the deal started with internal meetings on how to set the most convenient structure for the transaction, taking into consideration the client’s plans and expectations, the time period in which the deal should be closed, and other important details. Once the team prepared the transaction structure and presented it to the client for final approval, the full legal work began. The team, which was made up of several Senior Associates and Associates experienced in different legal areas, was internally led by me, and in general it was very well organized, with a clear division of working tasks and responsibilities and a time frame and detailed step plan for closing each phase of the transaction. During the whole process, each team member was focused on the specific tasks determined in the step plan, starting from the MoU, through the due diligence phase and, finally, in the negotiations process and transaction closing. Thanks to a disciplined and professional approach to the working tasks and dedicated performance within the set time frames, including effective internal communication and mutual assistance amongst the lawyers, we managed to successfully complete all phases of the deal, despite each of them being demanding and sometimes rather complicated. We feel professional satisfaction as we managed to add value to the final product of Karanovic & Nikolic’s team – the closing of the EUnet transaction – by combining the experience of different lawyers, from different practice areas, into one well-organized group of lawyers who were able to fulfill the expectations of our client and help them to realize their business goals as they had been presented to Karanovic & Nikolic at the beginning of the process.

Srdjan Gligo (VP): The deal between the sides and therefore the agreement is a bit complicated and slightly unusual, specially with the fact that Ms. Rosic continues to lead EUnet for the new owner. Negotiations were not easy, so good cooperation was crucial for successful conclusion of the deal. Both sides showed willingness to find common ground and to compromise on different aspects, and I think the final agreement is a fine solution – and that it protects the interests of both sides of the agreement.

Mirjana Rosic (EUnet): Having in mind the importance of the entire process and that this is the biggest IT transaction in Serbia in the last three years – possibly in the region, too – we expected certain difficulties. It was necessary to find an adequate balance between interests and protection of both parties, but we found common ground. So, the process wasn’t simple, but it wasn’t as difficult as these deals can be.


Were your client’s pre-deal expectations met, or was the final form of the deal different than initially anticipated in some way?

Rastko Petakovic (K&N): At the early stage of the transaction the team was presented with Serbia Broadband’s expectations, on the basis of which Karanovic & Nikolic proposed an adequate structure for the transaction, payment mechanism, indemnities, etc. We are happy to say that Serbia Broadband’s pre-deal expectations were fully met, to the satisfaction of both Serbia Broadband and Karanovic & Nikolic.

Srdjan Gligo (Vukovic): I think that EUnet is happy with the final agreement. They find it satisfactory, considering it is a result of good professional communication and engagement of all people involved.

Mirjana Rosic (EUnet): The previous owners of EUnet are content with the agreement, even though it is much more complex and extensive than was previously expected. We find this deal satisfactory for both parties, as it is the result of great professional cooperation and willingness to compromise.


How would you describe the working relationship with your client?

Rastko Petakovic (K&N): Karanovic & Nikolic has an extensive and close relationship with Serbia Broadband, as it has worked for them for several years. We have been involved in major transactions which the group to which Serbia Broadband belongs has undertaken in the Balkans in previous years. We are ecstatic that we have the opportunity to work for one of the most recognized and successful companies in the cable telecommunication market. Our professional satisfaction as a law practice particularly arises from the fact that the large number of deals which are very important to Serbia Broadband were closed to the benefit of Serbia Broadband with the help of Karanovic & Nikolic’s team.

Srdjan Gligo (VP): After years of working together with EUnet, we are now a team, but we still try to find a way to make our cooperation even more efficient. Even though we sometimes have different opinions on some matters, mutual trust that we built over the years and good and open communication helps us to solve every issue that we face together.

Mirjana Rosic (EUnet) (speaking about her relationship with Vukovic): All persons working on this process showed great responsibility and professionalism during the entire process and all in all the legal departments did a great job.


How would you describe the working relationship with your counterparts at the firm on the other side of the table?

Rastko Petakovic (K&N): The sell-side advisors were very professional, carrying out good quality and argumentative negotiations which helped us to close the deal to the benefit of both of our clients.

Srdjan Gligo (VP): Our working relationship with Karanovic & Nikolic on this deal was really good. Our colleagues from K&N showed competence, professionalism, and responsibility through the entire process.


How long did the process take?

Rastko Petakovic (K&N): The entire process lasted around 8 months (October 2014 – May 2015)

Srdjan Gligo (VP): The entire process (starting from the signing of the NDA) lasted one year.


Looking back, how would you describe the deal and your team’s work on it?

Rastko Petakovic (K&N): The deal itself was very interesting and challenging and was one of the team’s top priorities, primarily having in mind its importance to Serbia Broadband. Our focus was to structure the transaction in a way which fully met our client’s plans and expectations. Now that the deal has been closed, we can say that we are very happy and satisfied with the contributions of each of the Karanovic & Nikolic team members. Moreover, the combined work and experience of our legal team, led by myself and including both senior and junior lawyers, once again proved to be a great combination of experience and enthusiasm, which resulted in a positive outcome and successful closing of the transaction.

Srdjan Gligo (VP): Over many years of working with EUnet, this became more than a client-attorney relationship – we became friends with the previous owners of EUnet. Because of that it was personally important for Dejan Vukovic and me that they get the best possible deal and I think that we did a good job.


Finally, do you believe the deal had any special significance?

Srdjan Gligo (VP): From a legal perspective the deal was very complicated and thus very interesting – for reasons I unfortunately cannot disclose due to confidentiality terms. From the market perspective, the deal is interesting and significant because SBB is a giant in the market in Serbia (best known for providing TV and Internet via cable connection), while EUnet is the company that practically introduced the Internet in Serbia, and thus it is one of the oldest and best known brands in IT in Serbia, known for providing more “traditional” ISP services (ADSL and before that dial-up) and also for hosting and cloud services. It is part of a process lasting for maybe a decade in Serbia where ISP companies in the country are merging – bigger companies are buying smaller companies, broadening their size and also the scope of their services.

This Article was originally published in Issue 2.4. 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