Category: Austria

Herbst Kinsky has advised Austria’s Storylution on the entry of Thalia Buecher into the company through the acquisition of a minority stake as part of a capital increase. Heuking Kuhn Luer Wojtek advised Thalia.

Financial details were not disclosed.

According to Herbst Kinsky, “Storylution operates a digital publishing platform (Story.One) that puts authors in the spotlight and offers the possibility to turn their stories into books in an uncomplicated and intuitive way. Story.One now has over 100,000 stories by more than 10,000 authors from the entire German-speaking region and beyond.”

Thalia describes itself as “the leading omnichannel bookseller in German-speaking countries” and has 347 bookstores in Germany alone, while also being present in Austria and Switzerland.

“With the investment in the Vienna-based company, Thalia is expanding its collaboration with Storylution, which has been in place for around three years, and wants to discover and promote writing talent even more than before and offer them a platform in the book trade,” Thalia announced.

“The idea and the innovative concept of Story.One and its founder Hannes Steiner inspired us right from the start,” Thalia Buecher CEO Ingo Kretzschmar commented. “After we had already worked together successfully in Austria, and since this year also in Germany as part of the Young Storyteller Awards, we are now consistently expanding the partnership with the financial participation in Storylution. Story.One clearly shows that we are on the verge of a new age of book creation – the democratization of the book will be further driven by digital platforms, similar to what is already happening in the music industry, for example.”

The Herbst Kinsky team was led by Partner Philipp Kinsky and included Associates Barbara Ring and Leopold Gottsauner-Wolf.

Schoenherr, working with the UK’s Marriott Harrison, has advised the professional audio mixing console manufacturer Audiotonix Group on its acquisition of Austrian start-up Sonible. Held Berdnik Astner & Partner and RafterMarsh reportedly advised the sellers.

The Audiotonix Group is a British multinational company established in 2014. Its products are used extensively in live sound, broadcast, theatre productions, installations, houses of worship, film, music creation, and recording studios.

Located in Graz, Austria, Sonible GmbH is a tech start-up that “develops AI-assisted audio plug-ins, designs and implements 3D audio systems, and builds audio hardware, transforming technological possibilities into tools for audio production,” Schoenherr reported. 

According to MH, “through this acquisition, Audiotonix will enable Sonible to expand its current market solutions and will look to harness its technology across its other Audiotonix brands,” which include Allen & Heath, DiGiCo, DiGiGrid, Group One Limited, Harrison, KLANG: technologies, Slate Digital, and Solid State Logic.

“Along with investing in Sonible’s growth and helping the team expand its current market solutions, we will also look to harness its technology across our other Audiotonix brands,” Audiotonix CEO James Gordon commented. “The potential to utilize Sonible’s intelligence in our other brands will be a ground-breaking proposition for all our customers.”

The Schoenherr team was led by Partner Thomas Kulnigg and included Partners Christoph Haid, Marco Thorbauer, and Clemens Rainer, Counsels Veronika Wolfbauer and Teresa Waidmann, Attorneys at Law Niklas Kerschbaumer, Clemens Grassinger, Tobias Hayden, Alexander Pabst, and Nina Zafoschnig, and Associates Maximilian Czernin, Theresa Saufnauer, Dominik Tyrybon, Valentin Demschik, Sarah Felderer, and Yvonne Kraudinger.

Schoenherr has advised the joint lead managers on Raiffeisen-Landesbank Steiermark’s EUR 500 million issuance of mortgage-covered bonds. Wolf Theiss advised the issuer.

The joint lead managers included the Erste Group Bank, Landesbank Baden-Wuerttemberg, Landesbank Hessen-Thueringen Girozentrale, Raiffeisen Bank International, and UniCredit Bank.

According to Schoenherr, the “EUR 500 million 3.75% mortgage-covered bond is due June 26, 2026. The mortgage-covered bonds were successfully issued under Austrian law on June 26, 2023, under Raiffeisen-Landesbank Steiermark AG’s notes program and placed with professional clients and eligible counterparties. The bonds have a term of three years, mature in June 2026, and have a denomination of EUR 100,000 each. They are listed on the Official Market of the Vienna Stock Exchange.”

The Schoenherr team included Partner Christoph Moser, Attorney at Law Angelika Fischer, and Associates Daniel Gritsch and Clemens Stockhammer.

The Wolf Theiss team included Partner Claus Schneider,  Counsel Eva Stadler, Associate Sebastian Prakljacic, and Legal Trainee Caroline Zeitlberger.

Binder Groesswang has advised Austria Wirtschaftsservice on the launch of its new venture capital fund, AWS Gruenderfonds II, focusing on initial growth investments in innovative and sustainable technologies in Austria.

Austria Wirtschaftsservice is the federal development bank of Austria.

According to Binder Groesswang, “AWS Gruenderfonds II builds on the success of AWS Gruenderfonds I and starts its investment phase with a capital of EUR 72 million. Since 2013, AWS has already invested a total of around EUR 500 million in Austrian start-ups, through AWS Gruenderfonds I together with other co-investors.”

According to the firm, “the fund contributes to the further development of venture capital financing in Austria. It was implemented on the initiative of the Federal Ministry of Labor and Economics as part of the current government program. The venture capital fund is aimed at start-ups in the initial growth phase that specialize in innovative and sustainable technologies.”

The Binder Groesswang team included Partners Thomas Schirmer, Johannes Barbist, and Stefan Frank, Attorney at Law Simona Shpilsky, and Associate Christopher Marchel.

CMS Reich-Rohrwig Hainz has established a dedicated, separate competence center for English law – to serve its operations across CEE and SEE countries – with members including Vienna-based Partners Marcell Clark, Alexander Rakosi, and David Kohl and Solicitor Anna Freund.

According to CMS, the English Law team “focuses on financing and corporate/M&A transactions under English law as well as dispute resolution. The English Law Desk members advise clients globally but have a special focus on the jurisdictions of the CEE and SEE countries, where CMS Reich-Rohrwig Hainz has offices.”

According to the firm, Marcell Clark, Alexander Rakosi, and David Kohl “and their teams have extensive expertise in advising on banking and finance as well as corporate/M&A transactions governed by English law, including drafting and negotiating loan and transactional documents as well as providing legal opinions and general legal advice on English law,” while Anna Freund is a “disputes expert qualified in English law with extensive experience in handling litigation and arbitration in various industries.”

“The unique expertise of our team will be instrumental in successfully building the English Law Desk and ensuring that our clients receive first-class legal services in this specialist area,” Clark commented. “This will enable us to offer our clients an even more comprehensive service and a wider range of high-quality legal services in the future.”

Freshfields Bruckhaus Deringer has advised Roehm on its acquisition of SABIC’s Functional Forms business. 

Roehm is a German manufacturer in the methacrylates business with offices in the US and China and 13 production sites on four continents. 

Saudi Arabia’s Basic Industries Corporation, known as SABIC, is a Saudi chemical manufacturing company. 70% of SABIC’s shares are owned by Saudi Aramco. It is active in petrochemicals, chemicals, industrial polymers, fertilizers, and metals.

According to Freshfields, “the new combined company is expected to have sales of more than EUR 700 million and a global presence comprising 14 production sites. Subject to the completion of the carve-out of the business […] the transaction is expected to close in the first half of 2024.”

The Freshfields team was led by Germany-based Partners Stephanie Hundertmark and Maximilian Lasson and included Vienna-based Counsel Lukas Pomaroli, Principal Associates Kathrin Wildmoser-Zeller and Leonhard Prasser, and Associates Sophie Muuss and Can-Michael Nural as well as lawyers from the firm’s offices in Berlin, Munich, Duesseldorf, Hamburg, Frankfurt, Amsterdam, New York, Milan, Beijing, and Shanghai.

Freshfields could not provide additional information on the transaction.

Schoenherr, working alongside Sullivan & Cromwell, has advised Rhone Capital on its public cash offer for up to 29.9% of the share capital of RHI Magnesita.

The transaction is expected to close in the third quarter of 2023, pending regulatory approval.

Rhone, established in 1996, is a private equity firm with a focus on investments in businesses with a pan-European or transatlantic presence and expansion prospects.

RHI Magnesita is a supplier of high‐grade refractory products, systems, and solutions for high‐temperature processes exceeding 1,200 degrees Celsius in a range of industries, including steel, cement, non‐ferrous metals, and glass. Its registered seat is in the Netherlands, its place of central management is in Austria, and its shares are traded on the London and Vienna stock exchanges.

According to Schoenherr, “the offer document was published on June 19, 2023, following an announcement of the intended transaction on May 30, 2023. Ignite Luxembourg Holdings, a company indirectly managed by Rhone Holdings, is offering to buy up to a 29.9% stake in RHI at GBP 28.50 per share in cash, thereby valuing all of RHI Magnesita at GBP 1.34 billion (approximately EUR 1.57 billion).”

Earlier in 2023, Schoenherr advised Seven Refractories on the EUR 93 million sale of its European, Indian, and US operations to RHI Magnesita (as reported by CEE Legal Matters on May 10, 2023).

The Schoenherr team included Partners Sascha Schulz, Christian Herbst, and Volker Weiss, Counsel Evelin Hlina, Attorney at Law Zurab Simonishvili, and Associates Markus Fasching and Alexandra Gump.

Schoenherr did not respond to our inquiry on the matter.

On April 20, 2023, the European Commission (“Commission”) adopted a merger simplification package (“Package”) aimed at simplifying the Commission’s review of concentrations under the EU Merger Regulation. The core of the Package is the expansion of the categories of cases which can be treated under the Commission’s simplified procedure. In addition, the Package aims to streamline the review of simplified and non-simplified cases by introducing new notification forms.

Expanding the scope of application of the simplified procedure

Concentrations reviewed under the simplified procedure require less information from the parties and are normally cleared faster by the Commission. The Commission’s aim to increase the number of concentrations which are eligible for simplified treatment is, therefore, welcome.

In addition to the existing categories of cases which can benefit from simplified treatment, the Package identifies two new scenarios concerning vertical relationships which can be reviewed under the simplified procedure: (i) the parties’ individual or combined market shares are below 30% in the upstream market and the parties’ combined purchasing share in the downstream market is below 30%; and (ii) the parties’ individual or combined upstream and downstream market shares are below 50%, the increment of the market concentration index (HHI) is below 150 in the upstream and downstream market, and the party with the smaller market share is the same in the upstream and downstream market.

Furthermore, the Package introduces flexibility clauses under which the Commission has discretion to review certain concentrations under the simplified procedure even though they do a priori not qualify for simplified treatment. Flexibility clauses exist (i) for horizontal overlaps with combined market shares between 20 and 25%, (ii) for vertical relationships with individual or combined market shares between 30 and 35%, (iii) for vertical relationships with individual or combined market shares below 50% in one market and below 10% in the other vertically related market, and (iv) for joint ventures with turnover and assets between EUR 100 million and EUR 150 million in the European Economic Area (“EEA”).

The Package also introduces a “super-simplified” procedure for joint ventures with no turnover and assets in the EEA and for concentrations which do not give rise to horizontal overlaps and vertical relationships. The Commission invites the parties to such concentrations to notify the concentration directly without any pre-notification contacts with the Commission.

Safeguards and exclusions

The Package includes a detailed list of circumstances referred to as safeguards and exclusions. If one or more of these circumstances are present, the Commission will decide on a case-by-case basis whether the concentration has to be reviewed under the normal procedure although it is technically eligible for simplified treatment. As regards markets which fall under the flexibility clauses described above, the simplified procedure will usually not be applied if one or more of these circumstances are present.

The list of circumstances which can exclude the application of the simplified procedure is extensive and gives the Commission broad discretion in applying the simplified procedure.

New notification forms for simplified and non-simplified cases

The new Short Form CO (i.e., the notification form for concentrations qualifying for simplified treatment) has a “tick-the-box format” which primarily includes multiple-choice questions and tables. The parties will however still have to collect a substantial amount of information in order to be able to answer all multiple-choice questions correctly. In particular, the parties will have to indicate in the Short Form CO whether any of the circumstances referred to as safeguards and exclusions are applicable.

With regard to the (long) Form CO, the new Form CO eliminates certain information requests and includes clearer information on waiver possibilities. On the other hand, the Commission decided not to streamline the internal document requirements and even introduced a new extensive request that each party should provide information on data that it collects and stores in the ordinary course of business and which could be useful for a quantitative economic analysis.

Outlook

The new rules will apply to concentrations which will be notified to the Commission on or after September 1, 2023.

The Package’s objectives of increasing the number of cases reviewed under the simplified procedure and of streamlining the notification forms are welcome. Some newly introduced information requirements however risk complicating the preparation of notifications in practice and may require discussions with the Commission during the pre-notification contacts. Time will show how the Commission will apply and interpret its new rules in practice.

By Robert Wagner, Partner, Wolf Theiss

Cerha Hempel has advised IRMA Investments on Raiffeisen Beteiligung’s acquisition of a 50% stake in Austrian photovoltaic module manufacturer Energetica Industries. Dorda advised the Raiffeisen-Landesbank Oberoesterreich subsidiary on its investment.

Financial details were not disclosed. Closing is expected in the second half of 2023, pending regulatory approval.

Following the investment, the two companies each hold 50% of the shares in Energetica. According to Cerha Hempel, “together with its new partner, IRMA is planning to further develop Energetica and continue its successful expansion.”

With the current investment, Energetica is planning to expand its production capacity to 400 megawatts per year. According to Dorda, “the company sees itself as a specialist in high-end products for roof and ground-mounted systems as well as special applications for solar panels. It currently employs around 100 people at its headquarters in Liebenfels.”

The Cerha Hempel included Partners Albert Birkner and Nadine Leitner, Senior Counsel Wolfgang Sindelar, Counsel Michael Mayer, and Associates Jakob Weber and Zakar Stepanyan.

The Dorda team included Partners Bernhard Rieder, Martin Brodey, Felix Hoerlsberger, Heinrich Kuehnert, Bernhard Mueller, and Veit Oehlberger, Principal Associates Ulrich Weinstich, Alexandra Ciarnau, Julia Haumer-Moerzinger, Magdalena Nitsche, and Florina Thenmayer, and Associates Petra Artner, Prablin Cheema, Sarah Gruber, Julia Huber, Florian Huegel, Vivien Lux, Felix Zopf, Sebastian Stoeckl, and Paul Traar.

Struggling with high inflation, tough questions are being asked of the Austrian M&A market lately, and the government responded by planning a new, more flexible corporate form with reduced capital requirements, according to Graf Patsch Taucher Partner Bernd Taucher.

“Inflation, exceeding 8%, has severely affected Austria after the pandemic and the start of the war last year,” Taucher begins. “It has led to a decrease in purchasing power, causing prices to rise, and the unions are pressuring businesses for wage increases, further impacting the stability of the economy.” According to him, Austria’s current inflation rate, projected to be around 4% in the coming years, significantly exceeds the European Central Bank’s target of 2%. 

“High inflation makes it difficult for businesses to accurately value companies, particularly in the M&A market,” Taucher continues. “Fluctuating prices and reduced purchasing power create uncertainty, making it challenging to assess the true worth of companies. In addition, the banks are more reluctant to finance transactions, leading to increased financing costs. This reluctance stems from the volatile economic environment and the risks associated with fluctuating prices and reduced purchasing power,” he explains.

And transactional activity has been affected as well. “While the number of transactions in 2022 was comparable to 2021, the volume of transactions decreased. Uncertainty surrounding valuations and financing costs has led to caution among investors, resulting in a more reserved transactional environment,” Taucher says. “Investors have become more cautious and this cautious behavior is reflected in the market’s transactional activity as well. Although some sectors may experience an increase in transactions in the coming months, the overall unpredictability makes it difficult to accurately forecast market behavior,” he notes.

Taucher further reports that “ESG considerations have become increasingly important in transactional decision-making. Investment funds prioritize investments that align with ESG principles, as there are growing concerns about greenwashing,” he says. “Clients are seeking ESG-first investments, reflecting a shift towards sustainable and socially responsible business practices.” According to him, “it is crucial for businesses to adopt transparent and authentic ESG practices to attract investors and stay competitive. As ESG considerations gain prominence, investors prioritize investments that embrace a more aware approach, which can provide businesses with a significant competitive advantage in the market.”

As an example, Taucher says “the CEO of MAN recently indicated that their company aims to have between 30% and  50% of the fleet be electric by 2030. It is great to finally see the market be so cognizant of the threat of climate change – there is a lot of potential in the market to enact positive changes,” he posits.

Finally, Taucher reports “the government is lowering the capital requirement for establishing an LLC by more than two-thirds and is introducing a new form of incorporation that will make it easier and more tax-efficient for employees to participate. This is intended as a targeted incentive for founding and managing start-ups in Austria,” he says. Additionally, the government plans to decrease the minimum income tax from EUR 1,750 to EUR 500 per year. Taucher believes the new corporate form will make it easier for start-ups to establish flexible companies and enable employees to participate in their shareholding. “Most of the provisions are currently under review and have not been decided on in parliament. However, it is anticipated that they will be implemented in the coming months, possibly before the summer recess,” he notes.