Revco Hungary is a company that primarily manufactures plasters and paints. The company produces also footing products as well as glazes, primers, and surface treatment material. Saint-Gobain produces construction materials and other products. Saint-Gobain is expected to benefit from the merger by expanding its portfolio of indoor-outdoor systems and solutions, as well as broadening their product range.
CEE Attorneys provided legal advice to Revco Hungary. The team was led by Aliz David, and included Tamas Fessmann, a partner and senior associate Erika Sukod.
Aliz David, CEE Attorneys, Interview
What role did you and your team play in this sale?
We were contacted by the Dutch consultants of our client months in advance about the sale. The Dutch family company decided to sell its Hungarian subsidiary. It was our task to first evaluate the offers received from a legal perspective and then to review the Letters of Intent in Hungarian from the seller’s point of view. We also provided tax advice on the sale.
Our task later was to facilitate an agreement on the terms of sale with the Hungarian firm, prepare the company to be handed over, assist in the requirements for the seller to meet the conditions in the contract and work with the buyer’s representative to complete the licensing procedures. Our cooperation with the buyer representative was friendly and smooth throughout the entire transaction. This is important when dealing with a legal transaction of this complexity.
What were the most important legal and market considerations?
Due to the fact that, under the current Hungarian legislation, a ministerial licence is required for similar purchases and sales, and because of the company’s identity and market position, the Hungarian Competition Office must approve the transaction, it was important to plan for a longer period of transition between the signing of a contract and the finalization of the deal.
During this time, the management and operation of the business must comply with the terms stipulated by both parties. In order to protect the interests of the seller’s, buyer’s warranties are also required. The closing of the deal required the fulfillment of many conditions. In fact, the majority of work was done after signing the contract.
The parties also had to consider the fact that the market was a seasonal one. This meant they needed to create a structure which would be both balanced and complex in terms of the financial items calculated at the time of closing. REVCO Hungary was an older, tarnished company. This played a significant role in the decision. In order to preserve the value of the company, it was important to ensure that employees and partners would be as unaffected as possible by the changes. They should also continue working in an appropriate environment and continue their business partnerships as usual. All of these changes were implemented successfully with the help of Noerr’s economic and legal consultants.
The buyer’s agent was very friendly and helpful throughout the entire process, which is important when dealing with a legal transaction of this complexity.
Have you encountered any major obstacles during this transaction? How did you overcome these obstacles?
Noerr was responsible for obtaining the licenses from the competition office. It was a lengthy and complex process. The Revco Hungary subsidiaries that played a major role in the foreign sales had to be taken out of Revco ownership, the agreements regulating the sales had to change, and subsidiaries with trademark rights needed to be transformed. During long negotiations, it was important to reach an agreement that would work for both parties. Then, the agreements had to be implemented according to the laws of each country.
This was made possible by the cooperation and help of CEE Attorneys and their Romanian and Slovak law firms, CEE Attorneys and Noerr. The closing of the legal deal took place nearly a year after signing the sales contract. This meant that all parties had to be flexible and have insight during the months of transition. It was a very complex but also a very pleasant task, from a legal perspective. We are happy that the legal transaction has been concluded to the satisfaction of all parties.