CEFC steps up Czech acquisition drive

By bne IntelliNews September 7, 2015

bne IntelliNews -


China's CEFC conglomerate has agreed to buy a 10% stake in Czech budget airline operator Travel Service and to take over Czech brewer Pivovary Lobkowicz. The deals, announced on September 5, are the latest of a string of acquisitions announced by the privately-owned Chinese company in the past week as it seeks to make the Central European country a base for its European investments.

CEFC is to buy an additional 39.92% stake in Travel Service at a later stage. Travel Service operates Smartwings budget carrier and is the second largest shareholder in Czech flag carrier CSA, where Korean Air holds the biggest share of 44%. The value of the deal was not announced.

China's sixth largest private company also agreed on September 5 to buy together with partners a 79.4% stake in Czech brewer Pivovary Lobkowicz in a CZK1.9bn (€70mn) deal. CEFC will be the lead investor as it is taking 70% of the special purposed company buying the shares. Slovak financial group J&T will own 20%. The remaining 10% is held by Zdenek Radil, CEO and chairman of Pivovary Lobkowicz. Radil has an option to buy a further 10% from CEFC.

Lobkowicz owns seven local breweries and ranks as one of the country’s five biggest beer producers. The company debuted on the Prague bourse in May.

CEFC said on September 4 it will buy 59.97% of Czech football club Slavia Prague. Slavia, the traditional rival of Sparta Prague at the top of Czech football, has recently fallen on tough times. The remaining 39.98% will be held by Jiri Siman, head of Travel Service. No financial details were disclosed.

On top of that, CEFC also said it will buy minority stakes in communication firm Medea Group and media company Empresa Media, which owns television channel TV Barrandov and publishes weekly magazine Tyden.

CEFC agreed a deal to buy a building in downtown Prague from CPI Property on September 1 to serve as its European headquarters.

J&T - which has numerous assets in the Czech Republic - said on September 3 that CEFC has raised its stake in the company to 9.9% from 5%, with plans to boost that further to 30% eventually.

There has been a flurry of news about other potential Chinese investments in the Czech Republic recently. Chinese e-commerce giant Alibaba is eyeing a European hub in the Czech Republic, according to news reports. Meanwhile, pharmaceutical producer Xiuzheng and Fosun Group, one of China’s largest private conglomerates, are also reported to be mulling major investments in the country. Bank of China announced on September 2 it will set up a branch in the Czech Republic this year to support its compatriots.

The increased interest of Czech companies in the Czech Republic comes during a five-day visit of Czech President Milos Zeman to China. The president was the only EU head of state to attend a military parade in Beijing last week marking the end of World War II in Asia. EU leaders stayed away from the events amid concerns that the show of military power could send the wrong signal in an already tense region.

Prague, like its Central and Eastern European peers, seeks a slice of China's massive investment war chest, as well as increased trade with the Asian giant in a bid to diversify its export markets. A step in that direction will be the launch of direct flights between Prague and Beijing later this month.

Efforts by the Czech government to boost trade with China have been pushed heavily by Zeman. Never afraid to court controversy, his naked economic diplomacy has been at the centre of a debate over the direction of the country's foreign policy.

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