OMV steps up pursuit of Hungary's Mol
OMV has threatened to call an extraordinary shareholders' meeting if Mol's board continues to oppose take-over talks. The Austrian oil and gas firm also said it was launching litigation in Hungary against rules in Mol's articles of association that are designed to hinder a merger. In what it calls a "declaration of intent" – a euphemism for hostile take-over – OMV claims a majority of Mol shareholders have expressed support for its offer. OMV is offering Ft32,000 ($185.5) a share, which represents a 43.6% premium to Mol's share price before OMV's take-over bid in late May. At the same time, OMV has gradually increased its stake in Mol to 20.2%.
The trouble is that Mol's largest shareholder, itself, is against the merger. Although local laws prevent Mol's management from owning more than 10% of the company, through share buy-backs Mol's board is now believed to control almost 42% of the company's voting rights. As a "national champion", Mol has called on the Hungarian government to help it fight off OMV. The government views Mol – a significant employer – as a strategic national asset and wants it to remain under Hungarian control. It is planning a law that would protect designated "strategic" firms from foreign take-overs
The Hungarian financial watchdog is looking to fine Mol over the $2.8bn it has spent on share buy-backs since June 2007, while the European Commission has said it would start lengthy proceedings against Hungary for introducing such as law. OMV says it will launch its own litigation in Hungary against rules in Mol's articles of association that deter take-overs, such as the favourable "golden share" in Mol, a voting cap regulation and the constraint on removing only a limited number of board members at any one time. If the board refuses to talk, OMV says it will call the extraordinary meeting. "It is crucial within the EU that shareholders decide – not management who have non-transparent control of shares," says OMV.
While observers admire OMV's dogged determination, given that the Austrian firm requires a 75% majority to remove the 10% voting cap and other take-over obstacles, few believe anything but embarrassing the board can be achieved with the kind of numbers stacked against the Austrian firm.
Meanwhile, the tussle is having ramifications elsewhere. On 5 December, Mol proposed a merger of the gas-transmission businesses of eight countries in central and southeast Europe to form a $10bn company. The project would create one of the biggest gas networks in Europe, bringing together the pipeline systems of Hungary, Romania, Bulgaria, Slovenia, Croatia, Serbia, Bosnia-Herzegovina and Austria. Mol claims the new firm would aid the development of projects such as the EU-backed Nabucco pipeline.
While OMV has said it would consider Mol's proposal, it regards it as a reaction by Mol's board to consolidation in the region's energy sector, and "OMV remains convinced that the best reaction to that consolidation is a combination between OMV and Mol."