Hungary’s MOL, Croatia in talks on INA share swap

“Talks on the share swap are in a preliminary stage now. I don’t think they will be completed before the autumn,” the official, who wished to remain unnamed, told Reuters. Croatian daily the Jutarnji List said on Friday that the government was close to making a decision on swapping 14% from its portfolio in INA for shares in MOL, which would bring MOL’s stake in INA to 39%.

The government’s stake in INA would decrease from 44.84% to 30.84%, the daily said. It was not clear what size of a stake the Croatian government would get in MOL, which is fending off an unfriendly approach from Austria’s OMV. The government official said a share swap deal would be good for both MOL and the Croatian government. “This will help MOL, this will help us so everybody will be happy,” the official said. MOL, which has parked its stock in a series of lending agreements with friendly banks and with Czech utility CEZ to fend off OMV, said talks were under way about the renewal of a shareholder agreement. It said it was too early to talk of a date for any deal. MOL, which holds 25% of INA, has said repeatedly that it was interested in boosting its stake in the Croatian company.

Analysts said doing it via a share swap would be an easier financing solution for MOL than paying cash, and MOL would likely try to get some kind of buyback guarantee for its own shares. “The question is not only whether they can buy them (INA shares) and at what price, but what kind of agreement they reach with the Croatian government about the conditions,” said analyst Tamás Pletser at ING. Pletser said state intervention into petrol and natural gas prices was causing significant losses for INA and MOL would likely try to seek a solution for that.

At 0908 GMT, MOL shares traded at Ft 23,650, up 1.1% while the Budapest stock exchange’s main index .BUX was up 0.8%. INA rose 3.21% to 2,539 Croatian kuna ($542.2) (Reuters