The news came as Zsolt Hernádi, Mol Nyrt‘s chairman and CEO, vowed to defend his company’s independence against a takeover attempt from Austrian rival OMV AG. In an interview with the Financial Times, Hernádi said a tie-up with OMV would destroy shareholder value by forcing the merged company to sell significant assets at the refining, wholesale and retail levels. “In three countries, we would have a nearly 100% monopoly,” he said. “We are overlapping companies, not complementary.” Hernádi also firmly dismissed rumors that Mol would consider a counter-offer from a Russian bidder. He said reports in the Russian press that LUKoil could emerge as a white knight were based on a misunderstanding of his recent comments, that Mol would welcome co-operation with a Russian partner, such as Lukoil or Rosneft. “We could create a lot of synergies with a Russian partner but this would definitely not be on the corporate level,” he said.

OMV revealed on June 25 that it had raised its stake in Mol from 10% to 18.6% and proposed ‘friendly’ talks on a possible merger. Mol immediately treated the approach as the start of a hostile takeover attempt. Ironically, Hernádi has been assisted in defending his company by a document entitled “Mol Takeover Defense”, prepared for Mol by JP Morgan, the US investment bank, when it was advising the company in 2002. JP Morgan is now advising OMV in its bid for Mol.

The Hungarian government has backed Mol’s resistance. It plans to introduce legislation that would allow it to block companies controlled by foreign governments from taking over Hungarian companies with strategic assets.

OMV is 31.5% state-owned. An additional 17.6% is owned by IPIC, an Abu Dhabi investment vehicle that is obliged to vote with the Austrian government. Hernádi defended the company’s strategy of buying back shares, which has been criticized by someanalysts. “People are saying this is being done in the interest of management,” he said. “But I am totally convinced this is in the shareholders’ interest.” The company has said it will propose canceling those shares at the next general meeting next spring, which would increase the value of remaining shares. It has also announced a sharp increase in dividends, another move designed, analysts said, to prevent shareholders from backing OMV.

Hernádi laid out several additional arguments for rejecting OMV’s bid, portraying Mol as the better managed company. He presented figures showing that Mol’s market capitalization and profit – adjusted to strip out the effect of rising oil prices – had grown much faster since 2000 than the same figures at OMV. And while Mol’s pursuit of acquisitions, including smaller oil companies in Central Europe and upstream assets in Russia and Central Asia, had stalled, Hernádi said the company was “working hard” on deals both in and outside the region. (

Mol Nyrt, rejected a newspaper report that it was considering a merger with Poland’s largest refiner, PKN Orlen SA, to avoid a takeover by Austrian competitor OMV AG. Mol isn’t seeking to join with Orlen, Mol spokeswoman Catarina Roman said by telephone to Bloomberg. “It is true that we are interested in cooperation, but not in a merger,” she said.

Austria’s Economics and Labor Minister Martin Bartenstein said in an interview with the Viennese daily Der Standard, he would regard a OMV-MOL merger as “sensible”. “Protectionism certainly has no place here .. [and] EU laws regulate the internal market”, Bartenstein said, adding that “there is no EU law that allows for differentiating between companies on the basis of whether or not these are partially in state ownership.”