OMV has extended its stake in MOL to 18.6% from 10.0% and wants takeover talks with the Hungarian company, Reuters reports citing a source familiar with the matter. The company paid some EUR 1bn for the 8.6% which translates to some HUF 26,400 per share. OMV aim is to persuade MOL's management to agree to combine the companies into a Central European energy champion big enough to stand up to Russian rivals. OMV declined to comment on its intention but was seeking a friendly deal, according to the source of Reuters.
Our view: OMV has likely bought some 6% MOL stake from Rahimkulov family and might be from other smaller financial investors. Despite now holding near 20 percent, OMV's voting power is limited to 10 percent by the Article of Association. In our view MOL management will qualify the move as a hostile attempt and will resist to OMV's potential takeover. We also believe that MOL can easily resist until OMV does not combine its votes with other shareholders (with the votes of financial institutions like BNP Paribas and OTP plus voting with Magnolia shares, MOL management has access to some 24% of votes a very good chance to have slightly more votes at an AGM than OMV's 18.6%. OMV, however, is very likely to make a public offer, which can easily force MOL to the table. The news will certainly boost speculation on the market that it is very likely to see a bidding war in the near future.