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Deal 5: Budamar Logistics' Lubomir Loy on Joint Venture with Innofreight Consulting & Logistics

Deal 5: Budamar Logistics' Lubomir Loy on Joint Venture with Innofreight Consulting & Logistics

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On November 18, 2020, CEE Legal Matters reported that Hamala Kluch Viglasky had advised Slovakia's Budamar Logistics on the formation of a joint venture with Austria's Innofreight Consulting & Logistics. CEEIHM spoke with Lubomir Loy, Director for Sales and Marketing and Member of the Board of Directors at Budamar Logistics, to learn more about the deal.

CEEIHM: To start, please tell our readers a few words about Budamar Logistics.

Lubomir: Budamar Logistics is an established company in the CEE region with a long tradition. We operate mainly in the field of forwarding and international transport, but our scope is now so wide that it also extends to other areas, such as manufacturing, transshipment of bulk, and general cargo or river transport.

Despite the fact that we operate in a very competitive sector, Budamar Logistics has long maintained stable annual growth, substantial profitability, and strong penetration into less traditional industries in which we have not yet operated. One of them is also railway vehicle manufacturing, in which we are present, for example through the largest European manufacturer of freight wagons, Tatravagonka. It is in the segment of railway vehicles manufacturing, which is the subject of the establishment of the Budamar Innovations joint venture.

CEEIHM: What about Budamar Innovations – how did this joint venture come to be? And why did you pick Innofreight as your partner in it?

Lubomir: Trying to create an innovative project like Budamar Innovations was a natural step in the growth trajectory of Budamar Logistics and we are glad that we managed to reach an agreement with Innofreight.

As I mentioned, the business sector in which we operate is very competitive. On the other hand, it is a relatively rigid and conservative sector. From the point of view of Budamar Logistics, therefore, it makes sense to look for innovative solutions that will provide us with a competitive advantage and growth potential. The combination of great Innofreight technical solutions and the experience, know-how, and strength of Budamar Logistics is, therefore, a unique opportunity to create a joint venture partnership with the potential for strong growth and long-term existence.

CEEIHM: What will each of the two companies – Innofreight Consulting & Logistics and Budamar Logistics – be bringing to the table as part of this joint venture?

Lubomir: It is very easy to explain in few words – Innofreight is bringing hardware – cost-effective innovative solutions on the market of railway wagons. On the other hand, Budamar Logistics is bringing its software – over 20 years of experience in tailor-made solutions on the market of bulk transports. Both partners are among the top companies in Europe in their respective sectors and this is one of the reasons why it is a perfect fit for both companies and a win-win situation.

CEEIHM: What would you say was the most complex aspect in legal terms in structuring, negotiating, and implementing the joint venture?

Lubomir: I consider three legal aspects to be the most complex in this transaction.

First, setting up the joint-venture agreement itself was an extremely lengthy and legally difficult process. Both parties were aware of their strong position in the negotiations and, therefore, tried to translate as many of their ideas as possible into the joint venture agreement. As it is a long-term and perspective partnership, it was necessary to capture many details in the agreement so that this project would work smoothly also in its later stages.

Second, the size and scope of activities of the participating parties in each market, while a positive element towards the project stability and prosperity, is often the reason for the need to assess such a project from the point of view of competition law. This was also the case with this project, but thanks to the good work of our legal advisors, everything turned out well in the end.

Third, the essence of this project was largely to establish an innovative partnership that will be able to operate competitively in the field of technologically advanced rail vehicle systems. This was, of course, accompanied by a relatively comprehensive legal part concerning existing intellectual property rights, which became part of the joint venture.

CEEIHM: Why did you select HKV Law Firm for assistance in this matter?

Lubomir: HKV Law Firm is our long-standing legal advisor, with whom we have worked on many large projects and investments. Over the years of our partnership, a strong mutual trust has built up between us, which is essential in this business. In addition, Lukas Michalik, the responsible partner at HKV, is known for his excellent transactional practice, selection of the most suitable project structures, and high pace of work, which are all reasons for which we chose him for this project.

Originally reported by CEE In-House Matters.

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