MOL reports that out of 7.2m MOL shares traded yesterday it bought 5.0m, 4.6% of total shares. With this move total amount of own shares at MOL could reach 8.33m or 7.6%.
Our view: Due to the 10% cap on treasury shares it seems to us that MOL aggressive buying of own shares nears to its end. With MOL's yesterday share purchase (it bought 5.0m own shares at 29,974 yesterday) the company has spent some US$ 982m on buying own shares in the past three trading days. On Friday, the company announced that its net cash position stood at US$ 876m at the end of the second quarter. Even if we assume that exceptionally strong downstream margin environment and rising crude prices provided some US$ 350m extra cash for MOL in April and May, it seems to us that no more than US$ 240m might left in the company's treasury. After extending own shares to 10%, we expect MOL to find a friendly company (potentially an investment bank) to whom it can sell/lend these shares, unless they do not vote on a potential AGM. With these friendly votes MOL management can feel itself in a more safe position – unless OMV launches a public bid on the company. However, the fact that OMV share price dropped near 6% in the past two trading days on market rumors that OMV might continue buying MOL shares at this price, let us suspect that the management of the Austrian company is under pressure not to make such an action. After few crazy days we see the market of MOL shares to calm down soon with MOL substantially lowering the tempo of buying own shares. In our view, this could lead to a sharp fall in the share price in the short-term unless Rahimklov continues his purchases.