IFLR 1000
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The last six months have seen a significant upswing in terms of M&A work which has resulted in two of the largest transactions in the Czech market closing in the space of a fortnight in January. The first was the acquisition of Ceské Radiokomunikace by Macquarie European Infrastructure Fund and the second was the 50% acquisition of Czech Coal by Cyprus based Indoverse Czech Coal Investments.

The last few years have seen numerous transactions failing to close, with the majority of work relating to distressed sales, sales of non-core assets by multinationals and disposals by financial institutions following receipt of state aid. However the forecast for 2011 is more optimistic. Budget deficits are driving the sale of government assets by the newly elected centre right government. Most activity has been seen in the energy and utilities sector, which has seen privatisations, significant asset swaps and a lot of activity around renewables. Confidence in the market is returning, as the economy recovers and financing conditions ease in consonance with the upturn in M&A activity. "Solar exploded because of the state," says one partner, adding: "Last year was pretty much driven by solar acquisition. There were favourable tariff rates. This year there is a strong consolidation trend and the acquisition of smaller projects." Industry driven areas like banking and TMT and consistent sectors such as manufacturing, healthcare and food & beverage are all proving popular.

Another trend that showed the changing market conditions was the shift towards private transactions. "In private seller cases, after two years of unwillingness to sell as prices were lower, they're no longer scared," says one partner. "A good sign is the return of private equity houses," says another adding: "We see activity across various sectors." Practitioners are also seeing strategic investors competing with private equity houses on much more equal terms. "There is much more optimism in private equity. A lot of investments are secondary. Also strategics have come into play," says a market commentator.

The mid-market has also continued to grow. In "succession driven transactions", the entrepreneurs of the 1990s, having built up their companies are selling out. "There was the de-merger of a family owned group with assets all over CEE (Central Eastern Europe). It was very publicised. It was noticed by the man on the street. It was very complex," says one partner.

After a number of years of improved performances, Clifford Chance moves up in the rankings this year after the market almost unanimously agreed it merited a top tier spot. "Clifford Chance deserve tier one. Based on last year, they deserve to be there. They are sophisticated and independent from the London office. I see them a lot," says one peer.

It is self evident from the firm's activity that they have been involved in the highest profile deals of the previous year. In the last six months in particular the firm witnessed a dramatic rise in activity levels. This was demonstrated by the closure of two of the largest transactions in the Czech market in the space of a concentrated fortnight in January 2011. tone saw the firm advising Macquarie European Infrastructure Fund on the €574 million acquisition of Ceské Radiokomunikace (one of the largest telecommunications companies in the Czech Republic) from Mid Europa Partners and Al Bateen. The firm was also involved with Indoverse (Czech) Coal Investments on the acquisition of the remaining 50% share in the Czech Coal group (a large Czech brown coal mining company) from the Dutch sellers (Czech Coal).

The team also represented Dalkia Ceska republika (Dalkia) (the biggest heat producer in the Czech Republic) on its acquisition of all the shares in NWR Energy from New World Resources (Central Europe's leading hard coal producer). The transaction consisted of the outsourcing of heating, cogeneration and other energy assets located in the Czech Republic and Poland from New World Resources to Dalkia. At €131 million, it represents one of the largest outsourcing transactions in the energy and utilities sector in the Czech Republic to date.

With an impressive client list that includes Argus Capital Partners, Pfizer, Dalkia, Chevron and KKCG; Clifford Chance has proved itself as market leaders.

White & Case has been described as "a solid powerhouse" by one peer. There is little doubt that the firm commands respect in the market. "We view them as our main competitor, more than any other firm," says one partner. Moreover, as one client says: "Compared with other firms, they have huge responsibility and commitment beyond professional expectations." Such commitment is not to be taken lightly, as another client says: "They're extremely available. Even in a medical emergency, they were still available and got others to cover. They're there, anytime day and night."

Last year, the firm was involved in the largest corporate deal in the country and the second largest private equity sale in the CEE region. It represented Falcon Group (a consortium of investors 75% controlled by funds managed or advised by Mid Europa Partners) on its €574 million sale of Ceske Radiokomunikace to a consortium of funds managed by the Macquarie Group.

The firm was also involved in a large succession based transaction that received wide media coverage. It represented Bonatrans Group Holding (an entity controlled by certain members of the Komarek family) in a settlement with Karel Komarek Jr. This resulted in the KKCG Group, a multinational financial and investment group formerly jointly controlled by the Komarek family being split up. The settlement was achieved in the midst of heavy litigation among the family members and several injunctions.

The team also helped the founder/shareholders of Avast Software (one of five world antivirus giants) in connection with its restructuring under a Dutch holding company and the subsequent sale of a minority stake to a private equity investor, Summit Partners. The firm also advised on the creation of a complex Management Stock Option Plan for the employees of Avast group.

Clients were impressed with the firm's commercial awareness, with one saying: "They helped us negotiate properly. They understand the buyer/seller interpersonal dynamics and are very good at navigating that."

The perception of Allen & Overy in the market by its peers is not altogether clear. While many, no doubt, see the firm as good by virtue of its brand name; reports were varied. While some see the firm as a big-ticket operator. Others point to the firm's lack of consistent visibility, while others even see it as "on the way down".

A clearer picture emerges from clients who praise the firm for its understanding and approach: "The experience is very positive, the team is professional," says one client, adding that the quality of relationship is "very friendly and quite informal" and that they get along "very well both personally and professionally".

Evidence of Allen & Overy's activity is sufficient for the firm to retain its spot in the second tier. One highlight saw the team advise Energie Baden-Wurttemberg (EnBW) in relation to a swap of its shareholding in Prazska teplarenska for 41% of shares in Prazska energetika (PRE). PRE was owned by Energeticky a prumyslovy holding as a result of which EnBW became controlling shareholder in PRE (the third largest electricity supplier in the Czech Republic). The deal was one of the first large share swap deals in the Czech Republic concerning a listed company.

The firm also advised J&T Finance on the acquisition of 100% of the shareholding in Atlantik financni trhy and Atlantik Asset Management investicni spolecnost. Furthermore, the firm worked with GTS Central Europe's Slovak subsidiary on its acquisition of Dial Telecom Slovakia (making GTS the number one alternative telco operator in Slovakia). Consequently, the firm then advised on GTS's acquisition of the Sitel Data Center, a leading regional data centre company.

Baker & McKenzie has had a solid year and is making a serious push for top tier status. The firm has earned plenty of praise from its peers. "I've seen them on deals and hold them in high regard," says one partner, while another says: "We have met them in a number of transactions, especially in M&A deals in last years as a counterparty. The cooperation was always very productive, though competitive," adding: "I rank them really very high, actually, I believe they are leading law firm in this field in the Prague market." The story is very similar from clients: "When compared with other international law firms on the Czech market...they clearly stand out," adding, "they are very practical and, very importantly, never exceed the agreed budgets."

Tomas Skoumal, in particular, has been singled out for praise. "Tomas Skoumal is a very skilful lawyer. Tough negotiator, however, always moving the transaction ahead," says one partner and a client agrees. "Tomas is extremely hard working and dedicated and he runs the best group of M&A professionals in the country." Another says: "Tomas was eager to understand our business. He'd talk to the business guys and the marketing guys and became familiar with our business quickly."

The firm has been active advising Tatra (the largest Czech manufacturer of trucks) in relation to its sale of its subsidiary Tawesco (engaged primarily in production of stamping tools, fixtures and tools, cold-press stampings and weldments, especially for the automotive industry) as well as related real estate and movable assets to Promet Tools.

The team also acted for Penta Investments in Tesco's €42 million acquisition of Czech Zabka and Koruna retail stores from the private equity firm. The team also acted for Stryker Corporation in relation to the €1 billion acquisition of the neurovascular business of Boston Scientific.

Finally, in a transaction that required the implementation of several steps, the firm acted for Oracle Czech in its merger of Sun Microsystems Czech.

BBH's strong performance this year secures it a place in the second tier. The firm has built on its reputation as a successful M&A practice and there aren't many who doubt its improved deal flow. "They are a lot more active and have a lot more transactions," says one partner.

A clear highlight for the team last year was their advice to Skoda Investment on the last stage and final settlement of the €472 million sale of Skoda Power to the Korean company Doosan Heavy Industries & Construction, the largest M&A transaction in the entire CEE (Central & Eastern Europe) region for 2009.

Another substantial deal saw the team act for the PPF group and its investment partners (investment groups under Investicni klub and Bell & Blake) in the €164 million acquisition of a significant real estate portfolio in Prague. These transactions also saw the team provide advice on the preparation of several joint-venture companies

Another highlight saw the firm advise Saint-Gobain Building Distribution in its merger with another group company WAW (in the building materials & distribution industry). This process concerned the merger of two different legal structures and types of participating companies, which made necessary the parallel re-licensing of trade licenses and the change of the trade name of the successor company. Similarly, the firm advised Saint-Gobain Glass Solutions in the merger of three companies in the glass industry.

Glatzova & Co has been described as a "solid local firm" and Vladimira Glatzova has been described as a "very active and hardworking person". The firm is known for its legal proficiency and commercial awareness some peers observed that there has been a lack of visibility. However the firm has strengthened its practice this year and recently hired counsel Petr Cech.

In terms of deals last year the firm advised on the sale of a 50% share in Europasta by two individuals to strategic investors. The deal involved the structuring of a joint venture between four shareholders and included elements, which covered future cooperation with the investing shareholders.

The team was also involved in the €11 million restructuring of Netretail Holding which included new capital investment of Intel Capital and the entry of new investors into the market, primarily MCI TechVentures (Polish private equity fund). The transaction involved a range of Dutch corporate law governed aspects and the preparation of a complex shareholders agreement among several Czech, UK and Polish entities and individuals.

Finally the team advised on the acquisition of several Czech and Slovak subsidiaries of the Alcan Group (a part of Rio Tinto) by Apollo Global Management and worked on the sale of shareholding in Energie Baden-Württemberg by EDF International.

Weil has been described as a "different sort of beast" that is strong in governmental/state work. "They're very much in governmental work and have done their fair share of M&A in the past with the privatisations," says one rival partner. Of course, this does not preclude the firm's strength as it has been involved in some notable deals in the last year.

Karel Muzikar is a respected figure on the market. Although some commentators feel that Karel's "real" involvement in transactions is slight, he has been described as a "leading personality". "He has a large presence in the media and in governmental work," says one competitor.

A known client for the firm is electricity company CEZ (the largest Czech electricity producer and distributor) and the firm represented it in a €380 million ongoing acquisition of 85% of shares in Dalkia Usti nad Labem (a large Czech heating company) and 15% of shares in Dalkia Czech Republic (one of the largest heat and electricity producers in the Czech Republic). CEZ called on the team again in relation to its acquisition (via its Romanian subsidiary) of 100% of shares in TMK Hydroenergy Power a Romanian company which owns and operates four hydropower plants with a total installed capacity of roughly 18MW.

Notably, and in contrast to Weil government focused activities, the firm advised Summit Partners (an equity investor) in connection with the acquisition of a minority shareholding interest in Avast Software. The deal's value was €70 million and was the first investment in the Czech Republic of a major and reputable foreign growth equity investor into a developer of popular anti-virus software distributed under the 'freemium' business model which the target company pioneered. Additionally, at €28 million, the firm advised Cinema City International in its acquisition of multiplexes in three CEE countries (Czech Republic, Slovak Republic and Hungary) which resulted in it becoming the third largest cinema operator in Europe.

There is no doubting CMS Cameron McKenna's regional credentials when it comes to corporate and M&A work. The firm has an extensive network in place across the Central and Eastern Europe (CEE) region and narrowly misses out on a second tier place this year.

"I would put CMS higher because of their work for Advent International in private equity," says one partner. However, this feeling is not unanimous. "CMS had significant changes and we do not see so much of them now, only in the past," says another competitor.

In deal terms, the firm advised leading private equity firm Advent International on its €188 million agreement to acquire Provimi Pet Food (PPF) from the Provimi Group. Furthermore the firm worked on the Czech Republic aspects of Honeywell's €98 million sale of its sensor business and of shares in Honeywell Control to Sensata Technologies.

Havel Holásek & Partners is creating quite a stir in the market and has been generating mixed opinions as it continues to grow. "Havel is interesting, it is probably the largest team on the market but it does a different job to others," says one partner, while another comments: "Havel is big on PR. They're very active in terms of media but not so much in deals." Perhaps market sentiment is accurately gauged by the following quote from a competitor: "Havel do everything. They're big, spread out and un-definable in many ways as to the extent to what they focus on."

Deal highlights include advising Lenzing on the €75 million acquisition of 75% of shares of Biocel Paskov from the Heinzel Group and acting for Enceladus on the €70 million acquisition of Auto Kelly, a subsidiary of Elit Group.

There is consensus among competitors that Kocián Solc Balastík's (KSB) visibility has decreased on the market. Despite losing its second tier spot, the firm is known for its M&A work described by on leading lawyer as "a solid Czech firm" with "good clientele". The firm provided legal advice to the seller during the transfer of Capital CI Invest to the CPI Group and its subsidiaries. This included a portfolio of 2700 apartments in the north Bohemian city of Litvínov. Moreover, KSB advised Spolchemie, a Czech producer of chemical and biochemical products, in forming a joint-venture.

PRK Partner's reputation for finance does not extend to its corporate practice. However, the firm's recent hire of the team at French firm Gide Loyrette Nouel after its closure is sure to boost the practice.

Last year the team advised McBride (a major European manufacturer of body care and household products) in regard to its purchase of a noted Czech manufacturer of cosmetics. Furthermore, it is advising Freshfields Bruckhaus Deringer in relation to the de-merger of ABN Amro.

There is no doubt that Salans' strength lies in real estate. "I'm surprised by Salans, who we see exclusively in real estate and not really in M&A," says one partner. This focus paid dividends when the firm acted for Strategic Hotels & Resorts on the €110 million sale of the Hotel Intercontinental. The team also advised European Property Investors Special Opportunities (a fund co-managed by AEW Europe and Tristan Capital) on the €300 million acquisition of an 80% stake in six industrial parks in Prague owned and managed by VGP.

Weinhold Legal has had a fairly busy year and strengthens its position in the third tier. The firm provided advice to the vendors on the sale of automotive supplier Auto Kelly to RHIAG, backed by Alpha Private Equity. The firm also provided advice to Granette (one of the biggest liquor producers in the Czech Republic) on its acquisition and subsequent restructuring of distillery u Zeleného stromu – Starorezná Prostejov (Distillery by Green Tree).