The Hungarian Parliament has adopted a bill that protects strategic Hungarian companies, primarily the largest energy company MOL, from foreign takeovers.
With this move, Hungary has disregarded a warning from the European Commission that if this law is adopted, it will face the continuation of legal proceedings initiated against it in December 2006 before the European Court of Justice, due to non-compliance of the privatization law with European regulations. According to the new law, strategic Hungarian companies will be able to take protective measures against hostile takeovers from abroad after the announcement of a public tender for privatization, including the requirement that the offer must be approved by the highest body in the company.
Potential buyers will also have to submit a business plan, previously approved by their shareholders, to the Hungarian financial market regulator PSZAF before the announcement of their offer. The Hungarian government initiated the adoption of this law following the unsuccessful attempt by the Austrian state energy company OMV to make a hostile takeover of MOL. The Austrian company last week offered 32,000 forints ($179.5) per share of MOL, valuing the company at approximately $20 billion. The management of the Hungarian company rejected the offer, stating that it undervalued MOL’s assets and business opportunities. Hungarian Finance Minister Janos Koka and Prime Minister Ferenc Gyurcsany stated that the law protecting strategic Hungarian companies from foreign takeovers is in accordance with EU regulations. (H)
