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Strategies & Market Trends : Countries

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From: lukematt9/13/2008 9:04:04 AM
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Breweries and Soft Drink Bottlers Brno a.s.

Pivovary a sodovkarny Brno (literally “Breweries and soft drink bottlers Brno”) produced such excellent beverages as Kofola (the Czech national soft drink).

Kofola was developed in the laboratories of the Czech pharmaceutical company Galena during the 1960s (i.e. Communism) when researchers were looking for ways to use excess caffeine from coffee.

Galena licensed the formula for Kofola to Pivovary a sodovkarny Brno.

During privatization, I purchased a mere 53 shares of Pivovary a sodovkarny Brno for approximately 120 Czech crowns per share (about $4 per share at the time).

On March 21, 2002, Pivovary a sodovkarny Brno was taken off the market.


As usual with all delisted companies in the Czech Republic, at this point, “Big Money” grabs the small shareholders by the ankles, turns them upside-down, and starts shaking.

On September 6, 2005, we were notified that Pivovary a sodovkarny Brno’s majority owner was removing the company’s shares from the Czech government’s central clearing house, Stredisko Cennych Papiru (SCP).

Now, the fun begins (sarcasm!).

We had to find out when and where the company would issue certificates. At a minimum, we needed to telephone to the company. Sometimes, a company will give us the exact information that we need (dates, times, address) over the telephone. However, if the company is managed by curak-heads (sounds like “churak”—see, you learned a new Czech word :-)), they will say something like, “We’ll publish a notice in the newspaper Pravo.” In that case, we must check every page of every issue of Pravo until the notice appears.

Without fail, the certificates are issued at the convenience of the company. For example, a company might say, “We will issue certificates between July 1 and July 15, only on Mondays and Wednesdays, only between 13:30 and 16:30.”

Even worse, shareholders must travel across the country to the location where the certificates will be issued.

What happens if a shareholder doesn’t claim the certificates during the allotted period? The company holds an auction of all unclaimed certificates. I tried to attend one of those auctions, but they wouldn’t let me in because I am not a licensed stockbroker. Oh, that’s cute.

Here’s a photo from an auction :-) :

Can you imagine the results of such an auction?

“Bids start at 200 Czech crowns per share”
“The man in the shades bids 190”
“40. Going once. Going twice. SOLD!”

The proceeds from the auction are mailed to the shareholders who did not claim their certificates.


We got our certificates. We needed to travel two hours in one direction to the town of Moravske Budejovice where some little financial company, responsible for distributing the Pivovary a sodovkarny Brno certificates, has its office.

As time passed, Pivovary a sodovkarny Brno died to all appearances. “Big Money” told the pharmaceutical company Galena to kill the license agreement with Pivovary a sodovkarny Brno for Kofola’s formula. Then, “Big Money” started a new company named “Kofola a.s.” that still produces Kofola today . . . and, of course, all profits from the Czech national soft drink go to “Big Money”.

Pivovary a sodovkarny Brno’s factory stood empty for a long time.


In 2008, we were notified that we must exchange our certificates. Through a series of transactions that would make your head spin, Pivovary a sodovkarny Brno had been acquired by a company named “Drinks Union a.s.”.

My wife travelled two hours in one direction yet again to the town of Moravske Budejovice. However, this time, she returned empty handed.

Why? Our mere 53 shares of Pivovary a sodovkarny Brno had metamorphosed into 6,519 shares of Drinks Union. My wife had traveled by bus, and this large number of full-size certificates was too much for her to carry.

One week later, my wife and I travelled a third time to Moravske Budejovice. We filled two large backpacks with our Drinks Union certificates and headed to the separate storage place where we keep certificates from Czech companies. (We’ve gone through this damn share-chasing routine for approximately half of the companies in our Czech portfolio.)


The story is still not finished. (Don’t blame me! Blame the jungle.)

A couple of weeks after we exchanged the certificates, a representative from the Chairman of the Board for the company Drinks Union showed up unannounced at our front door, offering to buy our Pivovary a sodovkarny Brno shares. We informed him that we’d already obtained our Drinks Union certificates. He didn’t know what to do with that answer, so he left.

The next day, the Chairman himself telephoned to our home; he offered 24 Czech crowns per Drinks Union share. We politely told him, “Are you friggin’ crazy?” :-)

I know that Drinks Union a.s. is a great company. See for yourself:

Heineken N.V. thinks so, too. Three days after we received the telephone call from the Chairman of Drinks Union, Heineken announced that they were acquiring Drinks Union. The most current information that I have—Heineken N.V. will pay 159 Czech crowns per share.

Sometimes, the jungle looks more like the Garden of Eden.
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