CEZ and MOL cooperate, OMV disagrees

The two leading Central European companies are setting the base for a widespread strategic alliance. Czech counterpart CEZ AS, in the near future, is going to acquire a maximum of 10% share in Hungarian oil giant MOL Nyrt, with further possible financial transactions in parallel. The agreement does not contain reference to any cross-ownership and is expected to be finalized in two to three months.

As part of the alliance, the two companies are jointly planning to construct and operate electricity plants, which would be mutually beneficial to both corporations. MOL Group is the largest oil and gas firm in Central Europe with an EBITDA of $1.2 billion, while CEZ is a regional leader soaring at an EBITDA of Ft 1.8 billion.

Following Hungarian oil and gas player MOL’s outright rejection of a full acquisition approach by its Austrian counterpart OMV, the firm could now be planning to sell 10% of its shares to Czech utility CEZ, according to Thompson Financial, citing Napi Gazdaság. The business daily, citing unnamed sources, reported that the two firms are currently in talks over the proposed sale of 10% of MOL, in a deal worth more than E1 billion, Thompson Financial revealed. Portfolio.hu has reported that the stake sale could exceed 10%.

CEZ could acquire the 10% shareholding through a number of avenues. These include replacing an existing outside owner, and purchasing the treasury share pool of MOL, which is approaching 10%. In addition, the publication said that MOL could forge a share swap agreement with the Czech government, which currently holds 67% of CEZ.

OMV AG is the majority shareholder in MOL, with an 18.9% stake. Meanwhile, in a separate report, Thompson Financial has cited Euro Online has reporting the MOL and CEZ could be planning to strike a joint venture agreement, which would see them build gas-fired power stations with installed capacity of 800MW in Slovakia and Hungary.

OMV says MOL-CEZ deal not „ideal’’ for consolidation
OMV, which has proposed a merger with MOL, said a partnership between MOL and the Czech utility CEZ wouldn’t help the companies as the energy industry consolidates in central Europe. „That is not the ideal step to prepare for the coming consolidation of the industry,’’ an OMV spokesman, Thomas Huemer, said in an interview from Vienna today.

„We still believe that a merger between MOL and OMV would be the better step.’’ CEZ, central Europe’s largest power company, said yesterday it was in talks to buy as much as 10% of MOL and to build gas- burning power plants in Hungary and Slovakia. OMV, which is MOL’s biggest shareholder with a stake of about 19%, failed last May to merge with Verbund, Austria’s biggest power company.

Opposition from shareholders and politicians blocked the deal. The MOL-CEZ plan „may be taken negatively by the market since oil companies looking to get into power generation are not looked on favourably by investors,’’ UBS analysts led by Anish Kapadia said in a note to investors today. „An example of this is the failed proposed OMV-Verbund merger.’’

A link between Prague-based CEZ and MOL may allow the utility to benefit from rising energy prices in the region, where demand for natural gas is growing along with the expanding economy. MOL, which also pumps natural gas, is trying to fend off what it calls an „unsolicited and unwelcome’’ takeover attempt by OMV. (GR, MH 10, NG 13, Bg, energy-business-review)