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International Corporate / M&A – Romania

posted 7 months ago


Razvan Stoicescu





Active for more than 35 years, Musat & Asociații is a full-service law firm, recognized as one of the largest independent law firms in Romania. We are an acknowledged market leader in the fields of Corporate, M&A, Competition, Banking & Financing and Insurance, Environment, Regulatory, Employment, Real Estate & Construction, Litigation & Arbitration, to name a few of our areas of expertise.

With a rich tradition dating back more than 30 years, our Corporate/M&A department has become synonymous with excellence, reliability and innovation in the realm of M&A. As a 100% Romanian law firm, what sets us apart is our deep-rooted understanding of the local market dynamics. This allows us to provide our clients with strategic insights and foresight, enabling them to navigate complex transactions with confidence.

Our business is carried out by more than 100 lawyers and other fee earners, who are involved in a diverse range of complex transactions, project and advisory work as well as litigation. Their exceptional skills, combined with decades of experience, empower us to deliver innovative legal solutions, always having in mind our clients’ business strategies and objectives. Each member of our team is a significant contributor to the evolution of our M&A practice.

Moreover, our department boasts a broad expertise that covers a wide range of industries and sectors. Whether it’s technology, finance, healthcare or real estate, we have a proven track record of facilitating complex M&A across diverse fields, local, regional and international. This versatility allows us to adapt to the unique needs of every client, ensuring tailored and effective legal strategies.

International legal directories praise the work of our firm, and most of our partners are individually ranked as “leading individuals” or “highly recommended” practitioners.

In 2022, Mușat & Asociații won the Best Law Firm in M&A, Litigation and Pharma accolade at the Romanian Legal Awards Gala. This was the third time Mușat & Asociații won the trophy for the M&A practice area, following 2020 and 2019 – the year when Musat & Asociații was awarded Romanian Law Firm of the Year.

In 2021, we were named “Law Firm of the Year for M&A and Public Private Partnerships” by The Times Awards Legal Marketing – Legal Innovation (Bucharest, Romania); meanwhile, in 2018, we were awarded by CEE Legal Matters for the largest M&A Pharma transaction in Romania (Dr. Max acquisition of A&D Pharma group). Also in 2018, The Times Legal Innovation granted us awards for the areas M&A/Privatisation, Infrastructure and PPP/Public Procurement, as well as Criminal Law.

What our clients say about us in legal directories:

Overall impression is 10/10. We try to get their advice on most major deals, and we do rely on their advice. Availability [and a] business-oriented approach are all part of the package. – Legal 500, 2023

Musat & Asociatii have assisted us with an ongoing complex M&A project. The team succeeded to take necessary steps for performing the due diligence activities in a very short period of time, delivering the reports in the agreed timeframe. – Legal 500, 2023

They are well prepared and have the experience to explain different scenarios. – Chambers and Partners, 2023

The team has always made themselves available and accommodated our timeline requests. – Chambers and Partners, 2023

One client appreciates that the lawyers “anticipate our needs and bring to our attention any regulation changes that might impact us and ways to remedy them.” – Chambers and Partners, 2021

Attention to detail is phenomenal. There are no weaknesses. – IFLR, 2020

Our M&A clients include: (i) public and private companies, ranging from blue-chip multinational corporations to local companies; (ii) private equity and other financers, including venture capital and sovereign funds; and (iii) boards of directors of private or public companies.

We pride ourselves on being the trusted adviser of many global corporations doing business in Romania, active in all sectors of the economy, as well as the adviser of the Romanian State, Romanian public authorities, or Romanian state-owned companies.

During our existence, we have developed a deep understanding of the particularities and legal exigencies, as well as requirements, of M&A deals – having worked successfully in thousands of transactions concerning private parties, or with a public element, in all industries and sectors.

Our expertise covers all types of M&A transactions, both on a local and global basis, including (i) acquisitions, mergers and divestitures, (ii) cross-border transactions, (iii) take-private transactions, (iv) joint ventures, or (v) privatisation-based acquisitions, where our firm has gained unparalleled expertise in dealing with the Romanian State, Ministries and public institutions in a wide variety of contexts, including competitive auctions and exclusive transactions, having been involved in almost all key privatisations in Romania.

Another strong point of our M&A and Privatisations Practice is our comprehensive understanding of the corporate governance aspects of M&A transactions. Our corporate and litigation teams provide effective, ongoing counsel to shareholders as well as boards of directors in difficult and sensitive circumstances, in a variety of contexts, for both private and public deals.

Some of our M&A and Privatisations practice highlights include advising:

(a) a Chinese multinational automotive company in its joint venture with a French multinational automobile manufacturer, to launch a new powertrain technology company that aims to become the global leader in developing, manufacturing and supplying best-in-class hybrid powertrains and highly efficient ICE powertrains;

(b) a global leader in water, hygiene and infection prevention solutions and services, in connection with its strategic acquisition of an international resin manufacturing group, with production facilities also in Romania. The transaction was valued at approximately USD 3.7 billion;

(c) a Dutch shipyard in connection with a EUR 500 million acquisition of a Romanian shipyard, and subsequent joint venture with the Romanian State;
(d) an international investment fund in connection with the acquisition of one of the largest pharma chains in Romania, with a value of more than EUR 300 million;

(e) a global consumer products company, in connection with the USD 2 billion sale of its global battery and portable lightning business to one of the world’s largest manufacturers of primary batteries and portable lighting products;

(f) a multi-billion private equity fund, in connection with a USD 400 million acquisition of the drilling businesses and associated assets of the world’s largest offshore drilling company and the world’s largest offshore drilling contractor by revenue;

(g) a leading international player active in the construction products manufacturing and distributing sector, in connection with the acquisition of all assets and companies of the largest Romanian corporation in the construction sector. The acquisition was valued at approximately EUR 6.5 billion;

(h) a flagship listed business services and industrials company in connection with the USD 13.2 billion acquisition of 100% of a world leader working in electrification of vehicles.

Other mandates that set precedents on the M&A Romanian market, and on which our teams advised, include:

(a) the privatisation of Sidex Galati S.A, one of the largest Romanian steel producers (where we advised Arcelor Mittal);

(b) the privatisation of Banca Agricolă SA, the first successfully completed privatisation project of a top Romanian bank (where we advised the Romanian State);

(c) the privatisation of Banc Post SA, the second privatisation of a bank in Romania (where we advised the GE Capital);

(d) complex ICSID arbitration, where we have successfully represented the Romanian State against claims by a large US investor;

(e) the entry by Romania, through the Ministry of Finance, into an ISDA derivatives agreement for the management of its public debt.

Romania has a civil law system based on laws and formal enactments. Precedent is relevant but, unlike common law systems, is not binding in the courts. Our legislation in general, and corporate governance legislation – in particular – is aligned with EU law and harmonised with that of other member states of the European Union.

The main piece of legislation governing corporates in Romania is the Companies Law No. 31/1990. This sets forth the principles of incorporation and operation of Romanian companies, including essential governance principles.

Also, depending on the nature of the company, additional corporate rules may apply (e.g. issuers are subject to additional capital markets corporate regulations; credit institutions (banks) are subject to additional banking corporate regulations; whereas state-owned companies are subject to specific supplementary corporate governance rules).

Other pieces of legislation relevant for matters of corporate governance include: (i) the Law No. 26/1990 on the trade registry, republished, as subsequently amended and supplemented, together with its methodological norms – these enactments regulate registration and publicity formalities at the level of all Romanian companies; (ii) Law No. 359/2004 regarding the simplification of the formalities for registration with the trade registry of authorised persons, individual enterprises and family enterprises and legal persons, their fiscal registration, as well as the authorisation for functioning of legal persons, as subsequently amended and supplemented; (iii) the Government Ordinance No. 18/2022 on the authorisation and operation in Romania of secondary offices and foreign economic organisations; (iv) Law No. 15/1990 on the reorganisation of public economic units as regies autonomes and commercial companies – this regulates the conversion of former communist-era companies to modern forms, such as autonomous regies; and (v) Government Emergency Ordinance No. 109/2011 on the corporate governance of public enterprises.

We are very active in terms of corporate matters, with Romania providing our clients with significant opportunities to make strategic investments.

We are predominantly involved in mid-to-large international transactions (including share deals, joint ventures, reorganisations and carve-outs) for strategic clients specialised in health, energy, food, chemicals and automotive sectors.

We are preferred for this type of projects due to our capabilities – highly experienced lawyers (teams average 8–10 years of transactional expertise), combined with a large headcount, which allows us to successfully deliver on complex deals with tight deadlines.

We address all aspects of such transactions, spanning due diligence, contractual documentation, negotiations, merger control issues and foreign investment approvals – effectively providing a one-stop shop for our clients.

Assisting Geely Group on the implementation of its joint venture with Renault Group is a recent example that comes to mind. We reviewed the Romanian business structures of Renault Group, carried out due diligence with respect to each of these, and advised on the required restructuring steps of the group to support the joint venture arrangement.

The due diligence covered multiple companies, active in a highly regulated environment. The restructuring also required out-of-the-box thinking, as some of the companies within the group were subject to complex shareholding, which made the restructuring more complicated.

The due diligence was successfully carried out within the tight deadlines applicable to the client, and we are now in the implementation phase.

These are indeed factors that have shaped deal structures recently. We have seen these triggering a revision in valuations (decrease) as well as creating opportunities for buyers to request better pricing, or even push for better purchase terms altogether.

It has also fostered a lessened competition for deals and new assets coming to market – including from distressed situations, because investors now need to be able to absorb medium- and long-term unfavourable developments of the markets (see the increased military turmoil in Gaza, for example, and the pressure stemming from the Russian-Ukrainian conflict, etc.).

Energy and telecom sectors are becoming more and more appealing for investors. Meanwhile, the COVID-19 pandemic, the war in Ukraine, and the social and political movements in Romania and Europe, have forced investors to rethink their investments by choosing sectors with long term prospects.

The energy sector is perhaps the one in which there is the greatest interest, given the growing need to produce and supply energy in a competitive, environmentally friendly and renewable way – as well as the subsidies that states, including the Romanian state, are putting on the table. Recent and ongoing developments in science and technology are underpinning these projects, and business people want to be part of the action.

Real estate investment has also remained a priority, since land, either for development or agriculture, is highly sought after in Romania due to its accessible pricing.

We are working predominantly with large corporations. However, we have a strong presence in mandates involving SMEs, or even startups.

We promote a “trusted adviser” approach with our clients. This means our lawyers work closely with clients from the moment the business is set up, through their day-to-day activity, to a potential exit.

We encourage secondments, as they allow us to be very close to the needs of the business and gather extensive knowledge and understanding of its particularities – also working with general counsels, where required, to provide a type of legal advice that balances the legal requirements with the needs and priorities of the business. We aim to support the business, rather than overwhelming it with legal barriers.

Because of how we approach this client-adviser relationship, we are able to provide tailored compliance support that covers all legal angles of the business, protecting it for the benefit of our clients.

We have local connections in all jurisdictions. In fact, a substantial number of our clients are international and require cross-border work. In our more than 35 years of activity, we have also developed a “best-friends” relationship with the majority of top-ranked international law firms, working seamlessly with each of them whenever the needs of our clients require it.

We also have newsletters, and we participate in (and organise) conferences, as we view network events as inherent to the very nature of our business.

Yes – FDI screening, wherein non-EU foreign investors may run into challenges in terms of foreign direct investments rules. This FDI regulatory clearance regime can easily add three-to-eight months’ time to any closing with a non-EU established investor. The process is not complex, but in an unpredictable economic environment, having deals waiting months between signing and closing – awaiting clearance – is not ideal.

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