OMV AG, central Europe's largest oil and gas business, raised the stakes Tuesday in its drive to acquire MOL, saying it now holds just over 20 percent of the Hungarian company's shares and will appeal to its shareholders to accept the bid.
The Austrian energy giant said it was prepared to offer €127.70 (US$180) in cash per share to acquire MOL Nyrt., whose board — along with the Hungarian government — so far has rejected OMV's overtures as hostile.
Including the 20.2 percent of MOL shares that OMV said it now controls, the total value of the buyout would be an estimated €14 billion (US$19.75 billion).
The acquisition "would create a central and eastern European champion," said OMV's CEO, Wolfgang Ruttenstorfer.
MOL dismissed OMV's latest move, saying the offer "substantially undervalues MOL's businesses and prospects."
"OMV's step does not warrant further consideration on MOL's part and our company will not begin negotiations regarding OMV's current petition," it said in a statement.
MOL's chief spokesman, I. Szabolcs Ferencz, called OMV's announcement "the latest in a string of unilateral and unfriendly steps."
OMV shares fell 5.5 percent to €48.74 (US$68.72) each on the Vienna Stock Exchange. MOL shares had been suspended earlier Tuesday on the Budapest Stock Exchange, then rose 4.9 percent to 28,200 forints (€112.45, US$158.48) when they resumed trading.
Despite the resistance in Hungary, OMV said in a statement that it was determined to pursue "a unique strategic opportunity to create one of Europe's leading integrated oil and gas companies with a focus on the fast-growing regions of central and eastern Europe."
Although OMV's offer is not yet official, it urged MOL to lift restrictions on voting rights and let MOL shareholders decide their company's future.
Under current guidelines, all MOL shareholders — no matter the size of their stake — are limited to a maximum of 10 percent of votes on key decisions such as approving an acquisition or hiring a top executive.
OMV said its offer would be conditional on securing at least 50 percent of the Hungarian company and gaining approval from European Union antitrust authorities.
Ruttenstorfer said the accession of much of central and eastern Europe to the EU means "the time has come to think beyond national interests and find regional solutions to the issues surrounding the highly competitive oil and gas industry."
"That is why we have chosen to invest further in MOL and have been seeking to advance the informal discussions we have had with MOL's management over the years, as well as to initiate discussions with the Hungarian government," he said.
Ruttenstorfer said an OMV-MOL merger would better position the combined company as a major global energy player, and secure the region's oil and gas supplies.
OMV has been steadily increasing its stake in MOL. In June, it boosted its share from 10 percent to 18.6 percent.
MOL, meanwhile, has spent an estimated €1.67 billion (US$2.36 billion) buying back its own shares in a pre-emptive move to keep them out of OMV's hands. OMV said it believes MOL's management now effectively controls 40 percent of the Hungarian company's shares.
Government spokesman David Daroczi told state news agency MTI that Hungary continued to view OMV's attempts to gain control over MOL as a hostile move. Parliament is considering legislation that would make a hostile takeover of a strategic company such as MOL practically impossible without government approval.
Among other interests, MOL owns TVK, a leading Hungarian chemicals company; Slovak oil company Slovnaft; and has a minority stake in Croatian oil firm INA.
OMV, whose holdings include a majority stake in Romania's Petrom — now known as OMV Petrom — last month posted a net profit of €411 million (US$552 million) for the second quarter.
Last spring, OMV angered the U.S. government by announcing a preliminary agreement with Iranian officials to develop Iran's Pars gas fields. Washington warned that the deal would undermine sanctions against Iran meant to keep it from obtaining nuclear weaponry.
(The Associated Press)
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