The transaction amounts to 335 million euros
Еurohold, the largest Bulgarian holding and a leading independent financial and insurance group in Southeast Europe, owner of Euroins Romania, has officially completed the acquisition of the subsidiaries of Czech energy group CEZ in Bulgaria for EUR 335 million, through its wholly-owned unit Eastern European Electric Company (EEEC).
As a result of the transaction, which had previously been approved by all relevant local authorities, Еurohold has taken over 67% interest in the largest distributor of electricity in Bulgaria – CEZ Distribution Bulgaria (40% market share), and the biggest power supplier – CEZ Electro Bulgaria, as well as 100% of the capital of the largest licensed electricity trader – CEZ Trade Bulgaria. The group has also acquired IT services company CEZ ICT Bulgaria, solar park Free Energy Project Oreshetz, biomass-fired power plant Bara Group, and CEZ Bulgaria that coordinates and manages all CEZ Group’s units in Bulgaria.
By acquiring and integrating CEZ Group’s assets, Еurohold will more than double the number of customers it serves to over 7 million, and employ more than 6,000 people in 11 countries in Central, East and Southeast Europe (CESEE) and the former Soviet Union (FSU). The Bulgarian subsidiaries of CEZ Group have more than 3,000 employees and provide services to nearly 3 million customers in the most populated southwestern part of the country, including the capital Sofia. The total assets and revenue of the combined company are expected to exceed EUR 1.5 billion, while its EBITDA is forecast to reach around EUR 120 million per annum. According to the development strategy, Еurohold expects to generate revenue and EBITDA of almost EUR 2 billion and EUR 200 million per annum by 2025, respectively.
“This acquisition of CEZ Group’s subsidiaries is a milestone in the development of not only our company, but the Bulgarian economy as well. It has ensured an inflow of over EUR 500 million in the Bulgarian economy if we estimate the total value of the deal, including the price of the transaction, the forthcoming mandatory tender offer to the minority shareholders in two of the acquired companies and the investment program of CEZ in Bulgaria. Additionally, the acquisition will provide our clients and investors greater stability and predictability in every aspect and will generate potential synergies and favorable opportunities. Following the successful integration of CEZ Group’s subsidiaries, Eurohold will aim to support the current and future investment program of CEZ in Bulgaria focusing on customer service, network upgrade and maintenance, innovations, technologies and digitalization, as well as renewable energy and energy efficiency. We are grateful to CEZ Group’s management team for their professionalism and cooperation and would like to express our gratitude to all our partners that were part of the deal – banks, financial advisors, attorneys, employees and to the whole team of over 100 people engaged in this large transaction. Еurohold will focus its future development in two main sectors – insurance and energy. We have already developed a leading insurance group, operating across the CEE, SEE and FSU markets. Our long-term goal is to develop Eastern European Electric Company into one of the largest utility services providers in the CESEE region”, commented Assen Christov, Chairman of the Supervisory Board of Eurohold Bulgaria.
Еurohold will retain most of the existing CEZ Bulgaria’s management team in order to secure the expertise and experience that has been gained through the years, while at the same time invite in the board a few external experts, each of which has over 25 years of experience in the sector at leading positions in energy companies operating across Eastern Europe.
The owner of Euroins Romania financed the acquisition of CEZ Group’s subsidiaries in Bulgaria through a combination of equity raised via a capital increase and a public offering of new shares on the Bulgarian Stock Exchange (BSE) as well as a complex financing package including a strategic structured investment by Metric Capital Partners, where J.P. Morgan AG acted as Exclusive Financial Adviser and Sole Placement Agent and a senior syndicated facility subscribed by commercial and multilateral development banks. J.P. Morgan AG acted as a Sole Structuring Bank, Bookrunner and Initial Mandated Lead Arranger on the syndicated loan facility, with Bank of China Luxembourg, Raiffeisen Bank International AG, RaiffeisenBank Bulgaria and Unicredit Bulbank – as Bookrunners and Mandated Lead Arrangers. The Black Sea Trade and Development Bank (BSTDB), DSK Bank, the European Bank for Reconstruction and Development (EBRD) and OTP Bank acted as Mandated Lead Arrangers and Eurobank Bulgaria, International Investment Bank and United Bulgarian Bank acted as Lead Arrangers.
Earlier this month, Еurohold raised over BGN 157 million (EUR 80.5 million) in own funds on the BSE via a new share issue which was supported by international and local investors, who subscribed and paid up for c. 63 million of new shares. After the capital increase, Starcom Holding AD, Еurohold’s majority shareholder, supported by International Bank for Economic Cooperation (IBEC), remained a controlling shareholder, holding more than 50% interest in the company. A leading US asset manager acquired a 9% stake in Еurohold and became the third largest shareholder in the company after Starcom and KJK, further strengthening Eurohold’s shareholder base and corporate governance practices. The Bulgarian investment intermediary Euro-Finance AD was the Lead Manager of the public offering. Renaissance Capital acted as a Sole Financial Advisor and Public Offering Coordinator to Eurohold with respect to the offering.