Category: Czech Republic

According to Barbara Kusak, Partner at Noerr in Prague, the Czech Republic is currently preparing for its upcoming general elections. She also notes that the Czech economy shows no signs of contraction, despite the country’s abysmal COVID-19 infection rates, and that the infrastructure, IT, and e-commerce sectors are on the rise.

“We are expecting general elections in October, so we are in the typical pre-election mood,” Kusak says with a smile. “It is difficult to make predictions, but I think that a major topic of the elections will be the country’s poor epidemiological situation and response, which heavily impacted the budget,” she says and notes that the country amassed a USD 20 billion deficit in the wake of the pandemic. Kusak also notes that the government keeps busy with the Czech Republic’s upcoming presidency of the Council of Europe.

As for the economy, Kusak reports that, overall, it still seems unfazed by the pandemic. However, she admits that certain negative effects are tangible. “The inflation is growing and our need for workforce remains,” she says and explains that the country lost potential investors due to not having enough manpower for certain projects.

Looking at individual industries, Kusak notes that e-commerce is doing very well. “We recently had a substantial investment in online grocery delivery platform Rohlik,” she says (as reported by CEE Legal Matters on March 9, 2021). Unsurprisingly, the IT sector is also booming, according to Kusak. She lists NortonLifeLock’s landmark Merger with Avast as one of the key transactions in the sector. In addition, Kusak reports that there has been no shortage of infrastructure projects. She points to the D4 motorway extension as one of the most recent examples (as reported by CEE Legal Matters on May 14, 2021). However, she notes that infrastructure projects aren’t really the primary drivers of the economy, with the Czech Republic already being quite developed.

Furthermore, according to Kusak, the automotive industry is getting back on track, after it was forced into shutdown by the pandemic, as well as the shortage of parts and materials. Also, Kusak says that the logistics sector is currently hot and has been for a couple of years. However, she explains that most of the deals are related to acquisitions, rather than the development of logistics centers, as there isn’t enough room and people “are complaining about having warehouses in their backyard.”

Finally, Kusak reports that there has not been much legislative activity in the last few months. However, she notes that the new FDI regulation, which imposes restrictions on foreign investments in strategic sectors, has been implemented in May 2021.

CMS’s Lukas Janicek and Robert Gray Talk About The Deal of the Year in The Czech Republic.

CEELM: Can you describe the deal for us, and the CMS’s role in making it happen?

Janicek: We advised on the CZK 17.8 billion public-private partnership project based on a concession agreement between the Czech Republic and our client, the consortium of Vinci and Meridiam. Under the agreement, the consortium will build a new, 32-kilometer section of the D4 highway, which will connect Prague and South Bohemia, and will also upgrade an existing 16-kilometer section of the highway. The construction work is supposed to be completed in 2024. The consortium has been granted rights to operate the highway for 24 years following its completion and shall be paid only if the highway is indeed available to the public. So, the consortium is financially motivated to construct and maintain the highway in a way that keeps periods in which the highway is not fully available to a minimum.

In a nutshell, through this project, the Czech state is not only buying construction of the highway, but also the service of having the highway available for drivers in a defined quality over the entire term of the agreement. After the end of the concession period, the highway will remain in the ownership of the Czech Republic.

This was the first PPP of its kind in the Czech Republic. I can see two main drivers for implementing the project by the Czech government: the need to find alternative financing sources for infrastructure projects other than EU funds and the fact that this type of project is proven to be an efficient way in providing services to the general public in various other countries in Europe, including some countries in CEE such as Slovakia or Poland.

CEELM: How and at what stage did the firm get involved in the PPP?

Gray: We have been following the project, through several stages, since its inception. In fact, we have a long-standing relationship with all the members of the consortium and have advised them on various projects around Europe. Naturally, we offered our advisory services for this project as well. This was a great opportunity to further develop our relationship with Vinci and Meridiam.

CEELM: What was the most complex aspect of the project?

Gray: I think that the COVID-19 pandemic and related travel restrictions were the main obstacles to overcome. We were well prepared, nonetheless, as was the government and its legal advisors.

Janicek: Also, soon after the pandemic broke out, the bidders in the tender had to get commitment from the banks to finance the construction of the project and it turned out to be a challenge for everyone, as the financial institutions were very hesitant to commit to placing investments in such uncertain times. However, as all involved stakeholders were keen to find a way to make the project happen, the consortium negotiated with the banks and managed to overcome this issue.

CEELM: In contrast, what, from your perspective, went particularly smoothly and what do you believe contributed to it?

Gray: These projects are very document-heavy and complex, not to mention the travel restrictions. Things tend not to go smooth when bidders are not well prepared for the tender. Luckily, that was not the case with this project.

Janicek: Taking into account that this is the first project of its kind in the Czech Republic, and that two Czech ministries and a number of other institutions were involved on the side of the Czech state, the project took a bit more time than would be perhaps common in other countries. Despite that, it went fairly smoothly in my view. That was, in large part, thanks to experienced legal advisors both on the side of the government and the side of the consortium and the other bidders.

CEELM: Looking back at the whole process, would you do anything differently if you had a second go at it?

Gray: Nothing is ever perfect, but the project provides a good basis for the Czech Republic to pursue other similar public-private partnerships.

Janicek: In fact, the Czech government already has a new project in the pipeline, which is the development of the D35 highway.

This Article was originally published in Issue 8.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

VGD Legal has advised New York-based Steve Holl Architects on negotiations with the City of Ostrava for a design contract for the construction of a modern concert hall. The Ceska, Cisar, and Smutny law firm reportedly advised the city authorities.

VGD Legal’s team was led by Partner Robert Musil.

Ceska, Cisar, and Smutny’s team was reportedly led by Milan Kucera and Martin Krajcovic.

VGD Legal has advised Smarty Holdings on its acquisition of JRC Gamecentrum from Hamaga. Linkers Legal advised the seller and Havel & Partners advised the Ceska Sporitelna bank on acquisition financing.

Smarty Holdings is a Czech retailer of Apple products. JRC Gamecentrum is an operator of gaming stores chain present in the Czech Republic, Slovakia, and Romania

VGD Legal’s team consisted of Partner Robert Musil and Legal Trainee Dominika Pazoutova.

Linkers Legal’s team included Partner Ondrej Nejedly and Associate Richard Wild.

Havel & Partners’ team consisted of Partner Filip Cabart and Senior Associate Stepan Cerny.

White & Case has advised Avast on its merger with NortonLifeLock, structured as the latter’s takeover of the former. Macfarlanes and Kirkland & Ellis advised NortonLifeLock in the UK and the US, respectively.

The deal is expected to close in 2022, following necessary regulatory approvals.

Avast is a Czech developer of cyber security software, machine learning, and artificial intelligence. The Prague-based company employs over 1,700 people across 25 offices worldwide.

NortonLifeLock is an American developer of cyber security software. The company is headquartered in Tempe, Arizona and it employs over 3,500 people internationally.

According to White & Case, “the merger implies an enterprise value for Avast of between approximately USD 8.6 billion and USD 9.2 billion, depending on Avast shareholders’ elections.” In addition, according to the firm, “the merger will create a new, industry-leading consumer cyber safety business, leveraging the established brands, technology and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders.” Furthermore, “on completion of the merger, the combined company will be dual headquartered in Prague, Czech Republic, and Tempe, Arizona, USA, and will have a significant presence in the Czech Republic.”

White & Case’s team included Czech-based Partner Jan Andrusko and Local Partners Eva Svoboda and Jan Jakoubek; UK-based Partners Dominic Ross, Lucy Bullock, Allan Taylor, Nicholas Greenacre, Marc Israel, Will Smith, Tim Hickman, Amanda Cowell, and Jonah Anderson, and Associates Lachlan Low, Sonica Tolani, Ben von Maur, Elena Ruggiu, Samirah Haujee, Shelley Barnett, Tiffanie Chan, Kate Russell, Peter North, and Kate Kelliher; US-based Partners Chang-Do Gong, Suni Sreepada, Justin Wagstaff, Rebecca Farrington, Kathryn Mims, and Bryan Merryman and Associate Daniel Rosenthal; and Belgium-based Partners Mark Powell and Katarzyna Czaprack, Local Partner Alexandra Rogers, and Associate Iakovos Sarmas.

The Macfarlanes team included Partners Harry Coghill, Tom Rose, Robert Collard, and Jeremy Moncrieff, Senior Solicitors Laura Foley and Saba Palizi, Senior Counsel Rasmus Berglund, Counsels Mark Slade and Tim Redman, and Solicitors Emma Bailey and Natasha Sellayah.

The Kirkland & Ellis team consisted of Partners Edward Lee, Carlo Zenkner, Daniel Wolf, Melissa Hutson, Kirsteen Nicol, Thomas Dobleman, Ambarish Dash, Daniel Amato, Sophia Hudson, Jennifer Lee, Seth Traxler, Emma Flett, Daniel Lewis, Andrea Murino, Paula Riedel, Jeffrey Ayer, Matthew Sinclair-Thomson, Mary Liz Brady, Ivan Schlager, Nathan Mitchell, Sara Zablotney, Scott Price, and Sherry Xie, as well as Associates Michael Chung, Tobias Schad, Julia Knafo, Lee Discher, Phanne Yang, Jenna Trejo, Melanie Corbett, and Whitney Rosser. 

Havel & Partners has advised Bohuslav Maska on the sale of M-Soft to Jawvivotek.cz. Dostal & Sorokac reportedly advised Jawvivotek.cz on the deal.

M-Soft is an internet access provider in the Jihlava region of the Czech Republic.

Havel & Partners’ team included Partner Vaclav Audes, Senior Associate Veronika Filipova, and Paralegal Filip Pavlik.

Havel & Partners has advised Central European Supermarkets on the acquisition of Flosman Holding s.r.o. from the Flosman family. Clifford Chance advised Ceska Sporitelna on financing the acquisition. Randa Havel Legal advised the Flosman family on the deal.

Central European Supermarkets is a part of the Oriens Group, an independent, privately-owned financial boutique focusing on private equity investments in the Czech Republic, Hungary, and Slovakia. The acquisition of Flosman Holding s.r.o. included the indirect acquisition of Flosman, PF Potraviny, and Vavrik, which operate the Flop Top, Flop, and Potraviny CZ network of Supermarkets. 

Havel & Partners’ team included Partner Vaclav Audes, Senior Associate Veronika Filipova, and Paralegal Filip Pavlik.

Clifford Chance’s team was led by Prague-based Partner Milos Felgr and included Senior Associate Dominik Vojta and Junior Lawyer Bara Becvarova.

Randa Havel Legal’s team was led by Partner Alois Satava.

Glatzova & Co has advised the Pale Fire Capital SE investment group on the acquisition of VirtualTraining.

According to Glatzova & Co, Virtual Training is “behind the unique virtual training application Rouvy for cycling and running, which the Financial Times recently ranked among the best sports applications.”

Pale Fire Capital is a Czech private equity fund focused on supporting technology innovations.

Glatzova & Co’s team included Partner Jiri Sixta and Lawyers Jindrich Pastrnak and Gabriela Praskova.

Glatzova & Co did not reply to our inquiry on the matter.

Kocian Solc Balastik has advised J&T IB and Capital Markets on the arranging of 3M Fund MSI’s issuance of senior bonds with a value of CZK 1 billion.

J&T Banka was the manager, administrator, and security agent. The bonds were successfully admitted for trading on the Prague Stock Exchange.

According to KSB, “the proceeds are to be used to acquire and further develop real estate. So far, the portfolio includes seven initial projects, the largest of which is Trnita Palace in the center of Brno, Czech Republic. The company’s business combines both real estate development and the possession of already completed buildings for rent.”

KSB’s team included Partners Vlastimil Pihera and Martin Krejci and Lawyer Josef Kriz.

Glatzova & Co. has advised venture capital fund Reflex Capital on its investment in Czech event platform Happenee.

Financial details of the transaction were not disclosed.

According to Glatzova & Co., “Happenee was founded in 2015 and offers a unique comprehensive solution for virtual, hybrid, and physical events.”

Glatzova & Co. previously advised the fund on the sale of its stake in Webnode to Team.Blue (as reported by CEE Legal Matters on December 23, 2020).

The Glatzova & Co. team was led by Partner Jan Vesely.

The firm did not reply to an inquiry about the deal.