Croatian Zagrebacka Banka picks A&O for share bid advice
11 March 2002
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Allen & Overy's (A&O) corporate department has scooped a major new client in the form of leading Croatian bank Zagrebacka Banka (ZB).
A&O first met ZB on the other side of a deal in May 1998. A&O's Andrew Wilson had been advising Daiwa and Merrill Lynch as underwriters on a global offering of shares in Pliva dd, a Croatian pharmaceutical company in which ZB has a significant stake.
Three years later, ZB approached A&O to advise it on the joint bid by a consortium consisting of UniCredito Italiano and German insurer Allianz, to purchase 55 per cent of ZB's shares - between them, the two companies already held 20 per cent.
The A&O corporate team is being led by London-based corporate partner Pervez Akhtar, while A&O's Roberto Casati in Milan is advising on the Italian aspects of the deal.
UniCredito Italiano and Allianz are being advised by Clifford Chance. Credit Suisse First Boston is ZB's financial adviser, while Dresdner Kleinwort Wasserstein is advising the consortium.
The deal is unusual because ZB is a former state-owned entity and there has been an abundance of political debate about loss of identity of Croatian banks. Most of them are now completely controlled by Italians, Germans and Austrians.
The deal has taken more than a year to reach this stage and initially was clouded with problems. During the course of the transaction, the takeover rules in Croatia altered. The Croatian Takeover Code includes an exemption for the banks that the parties in the deal decided to use, but after an intention to make the recommended offer was made in May 2001, the Croatian parliament announced in June that the law would be changed.
The Croatian Constitutional Court then declared that even under the original law, the exemption was unlawful. The Croatian Takeover Code states that if more than 25 per cent of shares are acquired, then a mandatory offer has to be made for all the shares. The original deal was one where the consortium would acquire 55 per cent. The regulators insisted that a new offer must be made for the remaining shares. "This essentially scuppered the original deal," said Akhtar. "It had to be renegotiated."
A voluntary offer was then made outside the takeover code, which consists of 49.06 newly issued UniCredito shares for each ZB voting share, 4.906 new UniCredito shares for each ZB global depository receipt (GDR), $47.41 (£33.32) for each ZB voting share and $4.771 (£3.35) for each ZB GDR. A mandatory offer will now follow.
The offer is due to become unconditional on 11 March 2002 subject to, among other things, clearance by the Croatian Competition Agency for Market Competition, and the holding of an extraordinary general meeting to amend ZB's articles of association. The 90 per cent acceptance of shareholders - one of the original terms of agreement - has already been waived by the consortium.
A&O has acted on several matters in Croatia prior to this. It has advised the City of Zagreb on the city waste water project and has also acted for Autocesta Rijeka-Zagreb on the financing and construction of the Zagreb to Rijeka motorway and part privatisation of the state holding company.
This new relationship will strengthen A&O's position in an emerging market.