The European Commission has expressed serious concerns about the proposed takeover of Hungarian oil and gas company MOL Nyrt. (MOL.BU) by its Austrian peer OMV AG (OMV.VI), OMV said Tuesday.
As part of its scrutiny of the merger, the commission's competition office has sent a statement of objections to OMV naming areas of refining and marketing of refined products which are potential stumbling blocks for the merger, OMV said in a statement.
OMV said the commission now wants the company to propose concrete actions which would allow the merger to be approved.
The letter may be a key development in the battle between the two companies, as OMV Chief Executive Wolfgang Ruttenstorfer has previously said OMV has relied heavily on favorable decisions by the commission for its success.
OMV said last summer that, under certain conditions, it would be willing to offer 32,000 Hungarian forints ($208.38) for each MOL share in an unsolicited takeover bid, valuing Hungary's largest company at $20 billion.
MOL, however, rejected the approach by OMV, saying it was a hostile takeover attempt and would be value destructive.
MOL said a large portion of assets must be shed for a merger to go through, while OMV has maintained that most likely some 100 filling stations would have to be sold and some refining capacity leased to comply with European competition regulations.
Tuesday, MOL spokesman Ferenc Szabolcs told Dow Jones Newswires the letter from the commission is "an important milestone in the process," but otherwise declined to comment.
OMV, which currently holds a 20.2% stake in MOL, said the statement of objections is just a request for further information and a dialogue regarding the concerns listed.
The company said the commission has no objections in the areas of gas, petrochemicals and upstream business.
OMV said the company would analyze the statement of objections and present its view of how the issues can be resolved to the commission.
The final decision by the commission is due Sept. 18.