OMV Makes Hostile 2.8 Trillion-Forint Offer for Mol
OMV offered 32,000 forint a share in cash, 19 percent more than the closing share price yesterday, the Vienna-based company said in a statement today. OMV, which already holds 20.2 percent of Mol, fell as much as 6.7 percent in Vienna trading, the biggest decline since June 2006. Mol said it rejected the bid.
The Austrian company is going directly to shareholders after Mol and the Hungarian government pledged to fight the offer. OMV, whose bid to combine with Austrian utility Verbund collapsed last year, would get access to refineries in Slovakia, Hungary and Croatia and a pipeline network that can link gas shipments from Russia to the Balkans.
``The success of this takeover attempt is highly uncertain due to the expected strong resistance of Mol's management, the Hungarian government and some European Union antitrust issues,'' said Stefan Maxian, an analyst at Raiffeisen Centrobank AG in Vienna. He recommended selling Mol shares should they exceed 30,000 forint apiece.
Mol's stock advanced 3.6 percent to 27,930 forint in Budapest, the biggest daily gain since June 26, the day after OMV's takeover approach was first made public. OMV shares slid 2.57 euros, or 5 percent, to 49 euros in Vienna, its steepest daily decline since Aug. 10.
Rejected Approach
The Hungarian company rejected OMV's approach, saying in a statement that it ``isn't worth further consideration.'' The bid ``significantly undervalues Mol's businesses and outlook,'' the company said.
Before bidding for Mol, OMV Chief Executive Officer Wolfgang Ruttenstorfer must convince shareholders to clear obstacles including a rule that limits voting rights at 10 percent a shareholder. It also needs Mol management to ease its hold on the company's stock.
``We are definitely still dependent on Mol's management because of the 10 percent voting right limitation and because of their control of 40 percent of treasury shares,'' Ruttenstorfer said at a press conference in Vienna.
Hungarian lawmakers are discussing legislation to block OMV's bid, as part of a wider law that will give the government rights to veto acquisitions in what it calls strategic industries. Prime Minister Ferenc Gyurcsany in June said he will ``use every tool possible to foil'' OMV's takeover attempt.
`Strategic Importance'
``The government's position hasn't changed,'' Hungarian government spokesman David Daroczi said in an e-mailed response to Bloomberg questions. Hungary ``considers it important to have control over companies that have strategic importance for public supply, in the case of a foreign state trying to gain influence.''
The European Union is checking whether the planned legislation would conflict with its rules, Oliver Drewes, a spokesman for the European Commission said in an interview.
``We are monitoring the situation very closely, in light of basic treaty principles like the free movement of capital,'' Drewes said in Brussels. The commission is also checking whether a new law passed by Hungary to cancel ``golden shares,'' which give governments veto powers, was in line with EU regulations.
A takeover would boost OMV's refining capacity to 43.2 million tons a year from 26 million tons. It would give it 1.6 trillion barrels of oil equivalent in crude reserves and 427,000 BOE a day of production. The retail network would include 3,513 stations.
Annual Savings
OMV said it expects annual savings of 400 million euros ($563 million) a year from the merger and has about 9 billion euros available from a group of banks for the transaction.
Jeremy Wilson at JPMorgan Chase & Co. and Nigel Robinson at Deutsche Bank AG, both in London, are the lead bankers representing OMV, according to OMV's statement.
The Austrian oil company doubled its stake in Mol in June and called for merger talks, which were rejected. It spent 36 billion forint to raise its stake to 20 percent, OMV Chief Financial Officer David Davies said at a press conference.
Mol management has spent more than 487 billion forint buying back its stock to fend off the takeover. It now controls about 40 percent of its shares through options and loan agreements. The buybacks, along with costs to deflect OMV's bid, weakened MOL's financial position, Standard & Poor's said today.
``The current shareholding structure and takeover attempts by OMV are, however, risk factors that could cause the company's strategy or financial policies to shift, with resulting ratings downside,'' the rating company said in a statement.
Czech power company CEZ AS, which plans to build power plants with the Hungarian company, is in talks to buy 10 percent of Mol and today said the OMV bid won't change its plans.
``OMV is unable to achieve voting control in Mol at the present time,'' OMV said in the statement. ``OMV is therefore seeking to engage in active discussions with the independent shareholders.''
Even with a successful bid, OMV may have to contend with opposition from European Union antitrust authorities, according to analysts including Jakub Zidon at Erste Bank AG's Ceska Sporitelna unit in Prague. analysts said.
``The merger would create such a colossus in the Danube area that it would risk the European Union forcing them to sell some of the assets,'' Zidon said. ``There are a lot of synergies there but the question is if they would outweigh the risk of forced sales'' required by the European Union competition regulators.
Via|Bloomberg|by Balazs Penz annd Igor MullerTags: fotolog|fotolog|OMV|
