28.4.2022
RE Group was assisted by Lindblad & Co with share exchange and merger
The share exchange was carried out first, which made it possible to merge three subsidiaries into the parent company all at once. Attorneys Lindblad & Co advised RE Group so that the transaction would have as little tax ramifications as possible under the applicable laws.
From share exchange to merger
RE-Suunnittelu Ltd. has utilized Lindblad & Co’s services with all kinds on M&A-related matters since 2003. The company is a part of RE Group, which is a Finnish-owned company offering building design services. Before the organizational changes addressed in this article, RE Group was comprised of RE-Suunnittelu Ltd, RE-Consulting Ltd and Insinööritoimisto Kaitila Ltd.
In 2020 there were two big processes to complete: share exchange and merger.
First, a share exchange was carried out between Insinööritoimisto Kaitila Ltd. and RE-Suunnittelu Oy. Kaitila was already majority owned by RE-Suunnittelu, but in order to complete the merger it needed the full 100% stake in the company.
Lindblad & Co assisted the companies in a transaction where minority-stockholders of Kaitila gave up their remaining stock in Kaitila against RE-Suunnittelu’s shares. This kind of transaction is tax neutral. Since, under the tax laws, share exchange doesn’t count as transferring shares, taxes are levied only when and if the shareholders sell their RE-Suunnittelu shares. Thus, at this stage no taxes were levied from the shareholders. In addition, RE-Suunnittelu didn’t need to use liquid assets in the transfer, only its own shares.
The next stage was to merge the three subsidiaries into the parent company, RE-Suunnittelu Ltd. In addition to Insinööritoimisto Kaitila Ltd, RE-Consulting and Arkkitehtitoimisto VIA ltd were all merged with their parent. The transaction was overall complete at the end of 2020 and from Jan 1, 2021 onwards the business was continued as one company.
Fruitful and speedy cooperation
The goal of reorganization was to simplify the governance structure of the companies and reduce costs by doing that. Turning to Lindblad & Co to assist with the transaction was a natural choice after many years of cooperation, explains Martti Heikkinen, chairman of the company.
“We didn’t even have to think other options. We had had fruitful cooperation with Lindblad & Co for over 15 years and we had no reason to choose someone else. It was particularly important to bring a legal expert on board to avoid any tax issues, since we don’t have a lawyer in the company. Overall, I cannot overstate that I see it very important to let experts take care of matters that you yourself aren’t comfortable with. That way we can focus on our own business.”
All the stages of transaction and reorganization were done in cooperation between Linblad & Co and RE-Suunnittelu.
”The first stage of the process was to valuate the shares of both companies respectively. It was done by us, as we already had a formula in our shareholder agreement to calculate the value of share, which I used to valuate the shares and calculate the exchange ratio. After that the process was continued by Lindblad & Co,” explains Heikkinen.
”Lindblad & Co’s services included consultation to begin with. We talked and negotiated about how to advance with the process. During preparations Lindblad, among other things, provided us with drafts for board decisions and took responsibility to draft documents required by the Tax Administration,” Heikkinen adds.
Lindblad & Co also filed all the merger-related documents to the registers and notices to the creditors. In addition, the auxiliary business names were transferred from the defunct subsidiaries and registered under RE-Suunnittelu.
Punctual and comprehensible service
In addition to their expertise, Heikkinen praises the effortless cooperation with Lindblad & Co.
“Whenever we asked something, they responded quickly or at latest by the time we had something scheduled. This time, too, we created a schedule with sides having their own tasks in there. I’m very happy with how it worked.”
”I have mostly done business with Markku Lindblad and it’s been a pleasant experience. He is able to explains thing the way that non-lawyer like me can understand.”