How we helped to coordinate with the Federal Antimonopoly Service of Russia a deal to purchase 100% of the shares of a feed production plant.
On July 26, 2023, the Russian Federal Antimonopoly Service approved a request to grant consent for the acquisition of 100% of the shares of AO Khleb Kubani by NPAO De Heus. Both organizations are involved in the production of compound feed.
In transactions like this, there are three main parties involved: the seller, the buyer, and the entity being acquired (the legal entity whose shares are being purchased). If the combined value of the buyer's assets and the entity being acquired exceeds 7 billion rubles, or their revenue in the previous calendar period exceeds 10 billion rubles, the transaction must be approved by the Russian Federal Antimonopoly Service before it can be completed.
In this particular case, the assets of the buyer and the entity being acquired exceeded 7 billion rubles, so approval from the Russian Federal Antimonopoly Service was necessary. Conducting such transactions without Russian Federal Antimonopoly Service approval can result in a fine of up to 500 thousand rubles, as well as the Russian Federal Antimonopoly Service taking legal action to declare the transaction invalid.
The Federal Antimonopoly Service of Russia examines transactions to determine their impact on competition. This includes assessing whether a change in ownership could result in market monopolization, increased prices, or other negative consequences.
The FAS can approve the transaction, impose certain conditions, or reject it altogether. To seek approval, a petition with supporting documents is submitted, which can range from hundreds to thousands of pages depending on the number of individuals involved. The Federal Antimonopoly Service not only evaluates the buyer and the target company but also considers their affiliated entities, such as subsidiaries and parent companies. The objective is to ensure that the buyer, along with their subsidiaries, does not become a monopolist.
To support their case, our team of lawyers analyzed statistical data on the production of compound feed in the relevant market areas, specifically in the Krasnodar and the Vladimir Regions where the acquired and buyer's enterprises are located. We also calculated the approximate market shares of the parties involved. This analysis confirmed that the transaction would not have a negative impact on competition, would not lead to market monopolization in the feed production sector, and could potentially improve production.
Additionally, we gathered information on the buyer's affiliates and the company being acquired (the plant whose shares were purchased). Using this data, we created a list of groups of individuals with their affiliations and visual representations of these affiliated persons. These documents are necessary for submitting to the Federal Antimonopoly Service (FAS).
To assist the client in collecting the necessary documents regarding the transaction parties, we prepared a checklist. This includes notarized constituent documents, information on the economic activities of legal entities (such as details on main buyers, purchases, and key performance indicators), and an application. Based on the analysis mentioned above, the Federal Antimonopoly Service of Russia granted approval for the transaction without specifying its terms. This is because we have demonstrated that the transaction will not result in a restriction of competition in the feed market.