MOL increases stake in TVK from 84% to 95%

MOL announced it has increased its direct and indirect stake in its petrochemicals subsidiary TVK to from 84% about 95% yesterday. According to the announcement of MOL, the recent two stake purchases which represent 42% ownership package in TVK were concluded on a total price below EUR 200m. The deal price indicates MOL purchased each TVK shares less than HUF 4,970 per share. MOL also told they do not exclude further share purchases not plan a public bid and a squeeze-out in the short-term.

Our view:
We see the news could have some positive trading impact for MOL, as we believe the group has purchased TVK’s shares below their fair value. We see TVK’s fair value should be around HUF 6,000-6,500 per share, which could indicate a positive HUF 120-140 upward price correction for MOL. We see a higher stake in TVK could also result in some EPS addition for the MOL group as petchem cycle seemingly approaches its peak. At the same time we expect negative trading reaction for TVK, which currently trades at HUF 7,410, well above the indicated deal and the fair price.