State moves closer to acquiring stake in VIG-Aegon tie-up

Deals

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The Finance Ministry on Wednesday said the state has taken another step toward acquiring a stake in the Hungarian companies of Dutch insurer Aegon and the local unit of Vienna Insurance Group (VIG), Union Biztosító, according to a report by state news wire MTI.

The ministry noted that the state signed a memorandum of understanding in December on acquiring ownership in the companies.

"The government has decided: After Hungary and Vienna Insurance Group enter into a contract, as expected, the Hungarian state could acquire ownership of the Hungarian Aegon companies and Union Vienna Insurance Group Biztosító," the ministry said.

"With this decision, the sides have moved closer to signing a contract," it added.

The ministry said the deal would be "extraordinarily advantageous" for Hungary, pointing out that the insurers' combined share of the local market comes close to 20%, with annual revenue from premiums of HUF 240 billion, making a tie-up market leader.

"After the successful close of negotiations, the Hungarian state could acquire 45% ownership in the two big players on the local insurance market," it added.

VIG announced in November 2020 that it agreed to acquire the businesses of Aegon in Hungary, Poland, Romania, and Turkey for a price of EUR 830 m. In April 2021, VIG said its acquisition of Aegon's business in Hungary was denied by the Interior Ministry.

Under state-of-emergency powers vested by parliament, Hungary's government has been equipped with legal tools to block foreign takeovers of domestic companies.

In January 2022, the European Commission said it "preliminarily concluded" that Hungary violated the European Union's merger regulation when Hungarian authorities vetoed the acquisition of the local business of Aegon by VIG.

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