OMV AG chief executive Wolfgang Ruttenstorfer said that the goal of his company's approach to Hungary's MOL Nyrt remains a "combination on friendly terms" that will create a major central European player in the oil and gas sector and unleash overall synergies up to 4 bln euros.
OMV increased its stake in MOL to 18.6 pct from 10 pct at the end of June and invited MOL's management to 'friendly' talks. MOL rejected the offer, prompting speculation that OMV would go hostile, sending the shares up over 20 pct.
However, Ruttenstorfer again ruled out a hostile bid at present for Hungary's largest company and said he had no plans to call an EGM, but said the situation remained 'dynamic'.
"It is difficult to forecast what will happen even in the next six weeks," he said at a press conference in Budapest.
The CEO added that OMV was aware of a "third party" interested in MOL. He did not give details but said Russian companies were known to be interested in the region's oil and gas assets. He said this partly motivated OMV's decision to buy into MOL.
"It is our duty. If we see competitors on the horizon we will act. We can't sit back and say nothing will happen for the next five years," he said.
Ruttenstorfer said OMV is not pursuing a takeover of its Hungarian competitor, but rather is open to "all forms of combination", including solutions that involve a dual headquarters.
"We have said continually that we favour a friendly approach; all our recommendations must be approved by MOL's board," said Ruttenstorfer. "Our aim is to create a central European company that can compete with the big boys in Europe."
The CEO rejected the claims of MOL's board, which argues the move would see the company broken up and shareholder value destroyed, while the Austrian state's 30 pct stake would restrict the company's movement. He added he did not understand MOL's recent claims that OMV was engaged in double talk to mask its intention of seizing control of MOL.
Ruttenstorfer said that OMV is under no time pressure and views the time horizon for the closer co-operation it seeks with MOL at 2-3 years.
OMV has reached no decision on whether it will make any changes to the 18.6 pct stake it holds in MOL, but Ruttenstorfer said that there are "absolutely no plans" to sell the stake.
He added that OMV views its current shareholding as both a good investment and as a barrier to other potential suitors of MOL.
According to Ruttenstorfer, previous transactions in the oil and gas sector have generally unleashed synergies equivalent to 30-40 pct of the smaller company's value, which in the case of MOL and OMV would suggest potential overall synergies of 3-4 bln euros.
Similar transactions in the sector have also generated annual pre-tax synergies in the range of 6-7 pct of the smaller party's cash operating costs, which were 8 bln eur at MOL in 2006.
Ruttenstorfer added that he is convinced that further consolidation in central Europe's oil and gas sector is inescapable.
"Regional consolidation will be a dynamic process over the next couple of years," he said. "This time is a window of opportunity where you can gain an opportunity or lose it."
(AFX News, 08/08/2007)