Bulgaria’s Eurohold closes deal to buy CEZ assets for 335M euro

Bulgarian insurance and asset management group Eurohold Holding said that it has closed the deal to buy the Bulgarian assets of Czech utility company CEZ, which services western Bulgaria and capital city Sofia, for 335 million euro.

The group said that it acquired the seven companies owned by CEZ in Bulgaria through Eastern European Electric Company, a fully-owned subsidiary of Eurohold.

The seven companies are CEZ Bulgaria, which manages the group’s operations in the country; grid operator CEZ Razpredelenie; electricity distribution unit CEZ Elektro Bulgaria; electricity trader CEZ Trade Bulgaria; communications and technology subsidiary CEZ ICT Bulgaria; renewable energy producers Free Energy Project Oreshetz (solar) and Bara Group (biomass).

Eurohold will make a buyout offer to minority shareholders of CEZ Razpredelenie and CEZ Elektro, which are traded on the Bulgarian Stock Exchange after the Bulgarian state sold 33 per cent in each company on the stock market to complete their privatisation.

The group will “will aim to support the current and future investment program of CEZ in Bulgaria”, the chairperson of Eurohold’s supervisory board Assen Hristov said in a statement. The investment would focus on customer service, network upgrades and maintenance, innovation and digitalisation, as well as renewable energy and energy efficiency, he said.

Insurance has been Eurohold’s main business activity, with the group saying it had four million customers in 11 countries in central and eastern Europe, as well as the former Soviet Union. To that, it now adds another three million customers of CEZ in western Bulgaria.

In the future, the group plans to focus on both insurance and the energy sector, Hristov said. The group’s goal was to turn Eastern European Electric Company into one of the largest utility providers in the region, he said.

Eurohold agreed the deal to buy the Bulgarian assets of CEZ in June 2019, but the competition regulator blocked the deal in October 2019, saying that it would create conglomerates in Bulgaria’s insurance market and electricity sector. A court decision in July 2020 granted Eurohold’s appeal against the regulator’s decision.

CEZ initially agreed a deal to sell its Bulgarian operations in February 2018 to little-known local firm Inercom, prompting serious  objections among Bulgaria’s politicians, given the company’s small scale. That acquisition fell through in June 2018 when it failed to receive regulatory approval, leading CEZ to seek other buyers.

CEZ stepped on the Bulgarian market in 2004, when it paid 281.5 million euro for three regional power distribution companies in western Bulgaria, which it later merged. It was reportedly seeking to exit the market after accusing Bulgarian authorities of creating an unfavourable regulatory environment and lodging an international arbitration lawsuit in 2016.

CEZ becomes the second of three strategic investors that acquired Bulgaria’s electricity distribution assets in 2004 to exit the country. Germany’s E.ON, which bought two regional distribution companies in  northern and north-eastern Bulgaria, was the first to sell its assets in the country, to private Czech energy group Energo-Pro for an undisclosed amount in 2012.

(Monthly electricity bill with CEZ logo. Photo: Clive Leviev-Sawyer)

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