In 2017 Prudentia was attracted by one of the world’s leading private multi-asset alternative investment firms Bain Capital as an exclusive financial advisor, in order to help strengthen their portfolio company – leading precast concrete solution provider in Europe Consolis (www.consolis.com) – positions in the Baltic and Scandinavian region. AS “TMB Group”, which is a concrete product manufacturing company headquartered in Estonia with production operations in Estonia, Latvia and Finland, was selected as a potential target. In recent years AS “TMB Group” has showed that it has been able to become one of the fastest growing construction material producer and exporter in the Baltics, and after the acquisition of its Finnish competitor Betonimestarit in 2016 the group became an important market player in Sweden and Finland.
Taking into account the market presence of Consolis in the Baltics and Scandinavia, the merger had to be approved by competition authorities from four different countries – Finland, Sweden, Estonia and Latvia. Initially the deal process went smoothly forward and it was anticipated to close the deal during 2018, but the position of Estonia’s competition authority came as a surprise. They believed that Consolis and AS “TMB Group” merger would lead to a dominant position in Estonia by the merged Newco, which would significantly reduce the competition. Also the competition authority from Finland proposed certain conditions in order to allow the merger (Latvia’s competition authority allowed the merger with no conditions imposed), but the method for deal analysis employed and the initial decision by Estonia’s competition authority came as a huge surprise for both transaction parties. Due to authority’s decision the probability by the end of 2018 decreased dramatically, but thanks to enormous effort contributed by all deal participants a solution was found and the deal structure was remodeled, leaving out AS “TMB Group” assets located in Estonia.
Within the project Prudentia carried out full range of services – organizing the initial meeting with both parties, drafting indicative and binding offers, conducting negotiations and coordinating the closing process, which was the most challenging stage of the whole deal due to negative decisions made by competition authorities. Right at the beginning Prudentia was able to achieve that the buyer entered in an exclusive mutual conversation with the seller, promptly found mutually acceptable deal structure and it was Prudentia who played an important role in resuming negotiations and changing the deal structure even after the negative decision was made by Estonia’s competition authority. There was an extensive number of involved advisors – Investment Agency from Estonia acted as a financial advisor and Cobalt acted as a legal advisor for the seller, but besides Prudentia also audit firm PricewaterhouseCoopers was involved in the Due Diligence process, and legal advisors comprised of Ellex Raidla (Estonia), Krogerus (Finland) and Setterwalls (Sweden).
The deal was completed in April 2019, and as a result the merger of Consolis and AS “TMB Group” not only ranked as one of the largest Baltic M&A deals in 2019, but also became as one of the largest private individual exit deals in Estonia’s M&A history.