OMV Announces Continuation of Battle for MOL

The Austrian state energy company OMV announced on Tuesday that it will not abandon its efforts aimed at acquiring Hungary’s largest energy company MOL, despite a law passed by the Hungarian parliament aimed at protecting strategic domestic companies from foreign takeovers.

"We still intend to reach an agreement with MOL," said OMV spokesperson Thomas Huemer to the Dpa news agency. "We are confident that dialogue will occur and we are under no time pressure." The Hungarian parliament on Monday showed unusual unity by adopting a bill to protect strategic Hungarian companies from foreign takeovers with 334 votes in favor and only four against. 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 that the offer must be approved by the highest body in the company. Potential buyers will also have to submit a business plan approved by their shareholders to the Hungarian financial market regulator PSZAF before announcing their offer.

The Hungarian government initiated the adoption of this law after the failed attempt by the Austrian state energy company OMV to take over MOL. The new law represents an obstacle to acquisitions, and the European Commission has expressed its concern. Huemer stated that he is confident that European Commissioner for Internal Market Charlie McCreevy will thoroughly examine this law. McCreevy warned Hungarian Minister of Economy Janos Koka in writing last Thursday that if it is determined that this is protectionism, he will initiate a case against Hungary before the European Court of Justice. "If it is determined that the proposed actions and laws of the Hungarian government represent obstacles for economic actors from other member states interested in MOL, I will be forced to recommend to the Commission to pursue legal action regarding ongoing proceedings," McCreevy wrote.

The existing case was initiated in December of last year after the government did not change laws deemed discriminatory for foreign investors. However, Koka and Prime Minister Ferenc Gyurcsany argue that the law protecting strategic Hungarian companies from foreign takeovers is in accordance with EU regulations. OMV has been inviting MOL to the negotiating table for four months, and last week offered 32,000 forints (179.5 dollars) per share of that company, valuing it at around 20 billion dollars. The MOL management rejected this offer, arguing that it undervalued its assets and business opportunities.

The Austrian company announced that it has identified annual synergies of 400 million euros, while MOL claims that the merger would force the combined company to sell off a significant portion of its joint assets in the region. Huemer, however, insists that this is not the case. "We believe it would be possible to simply sell off some gas stations or allow other companies partial use of our refineries," he says. A few independent shareholders of MOL, under pressure, have expressed support for negotiations with OMV, but the MOL board of directors currently refuses to change its stance.  (H)