Reversal: CPC allowed Eurohold to buy CEZ

The Commission for the Protection of Competition (CPC) has allowed insurance holding Eurohold to acquire the companies of Czech energy group CEZ in Bulgaria, the buyer announced to the Bulgarian Stock Exchange on Thursday.

The CPC’s decision was not published on its website, but Eurohold was notified of the permit, which was rejected exactly one year ago and the deal was banned. After an appeal, the Sofia District Administrative Court found a number of violations in the CPC ruling and returned the procedure for a new hearing, which now ends positively for insurance ownership.

The green light from the CPC will allow the completion of a € 350 million deal in which Eastern European Electric Company, a subsidiary specifically established by Eurohold in the Netherlands, will acquire control of six of CEZ’s companies in Bulgaria. In reality, Eurohold will acquire 63 percent of the shares of the grid operator in western Bulgaria and the same amount of the electricity supplier in this region, in addition to taking over the entire electricity marketer, two renewable energy projects and an information technology company.

“The acquisition of the CEZ Group companies is part of Eurohold’s strategy to enter new regulated markets in Southeast Europe and create a leading regional utility company,” the holding said in a statement to the stock exchange, where it is listed.

“The integration of the CEZ Group companies in Bulgaria into the Eurohold structure will be supported by an energy board of Bulgarian and international experts with more than 25 years of experience in energy and held positions of responsibility in large energy companies in Europe. from the East – Gary Levsley, Dan Catalin Stanku and Georgi Mikov “, remembered for” Eurohold “.

The future owner ensures that the current senior management of CEZ Bulgaria will maintain their positions to ensure continuity in management.

“We see the CEZ agreement as a step towards entry into the energy business and an opportunity to diversify our portfolio. Eurohold has solid experience in regulated markets and in the acquisition and integration of new companies in various sectors. Over the last 20 years we have made some 30 acquisitions and we have accumulated significant experience, “commented Vasil Stefanov, Director of Acquisitions and Mergers of Eurohold Bulgaria.

The CPC’s approval is a complete reversal of last October’s decision to ban the deal. It remains to be seen why it is now allowed and the antitrust authority no longer sees any problems in front of it.

The deal between Eurohold and CEZ was banned by the CPC, as was done in the first attempt to sell CEZ’s Bulgarian business to Ginka Varbakova’s Inercom.

For Eurohold, the antitrust commission’s concern that the insurance company’s acquisition of an energy business could disrupt the non-existent guarantee market proved to be an obstacle to the acquisition. The CPC was not impressed by Eurohold’s promises not to offer insurance for participation in the electricity exchange, which, according to the commission, could lead to abuse of monopoly.

However, this was disputed by Eurohold and the CEZ itself, and in its decision the Sofia District Administrative Court found that the CPC had not carried out an “in-depth investigation”, but had instead simulated one and unconditionally prohibited the treatment. According to the magistrates, the commission also committed important procedural violations.

Therefore, the CPC was forced to initiate new proceedings on the agreement.

The contract between Eurohold and CEZ was reached after the antitrust body prohibited Inercom from acquiring the business for equally bizarre reasons.

Eurohold’s interest in CEZ’s assets in Bulgaria became apparent in March 2019, and a month later, while negotiations between the two countries were underway, the Financial Supervision Commission initiated checks on the insurance holding company to see if he had the financial strength to acquire the company. The results never came true, but were sent by the FSC to the prosecution, the tax authorities and the State Agency for National Security. It is unclear what happened to these authorities after that.

In expired in early June 2019, recordings with a voice like Prime Minister Boyko Borissov’s are instructed: “Otherwise, inflate the fact that I put the FSC on ‘Eurohold’ to blur his face, which does not meet me.”

It is not clear who “she” is, but energy circles say both CEZ and Eurohold have been dissuaded by “government emissaries” from abandoning the deal.

The Sofia City Prosecutor’s Office is investigating how this recording was made and whether it was manipulated. Meanwhile, two international experts, commissioned by the Bivol website and Socialist MEP Elena Yoncheva, found that Prime Minister Boyko Borissov’s recording was authentic.