MOL shareholders rebuff OMV in bitter fight

Deals

Hungarian oil and gas group MOL’s board pushed through all of its proposals at Wednesday’s annual shareholders’ meeting, despite opposition from Austria’s OMV, the company’s biggest owner.

Shareholders approved the board’s report, dividend proposal, lifted the firm’s share buyback cap to 25% from 10%, cancelled 5.5 million treasury shares and reelected both Chairman and Chief Executive Zsolt Hernádi and Chief Executive György Mosonyi to the board. All motions passed with relative ease and had support of around 70 to 80% of shares represented at the meeting, no surprise, when MOL and companies that OMV charges are its allies hold around 45% of the Hungarian company’s stock. The meeting was held amid tight security and one large shareholder was not allowed into the event as he did not possess the correct identification, a spokesman for MOL said.

OMV, which holds 20.2% of the company and has been engaged in a battle with MOL, said the Hungarian company was “ignoring the rights of independent shareholders” and “ignoring internationally accepted standards of corporate governance.” OMV has said it would be prepared to offer Ft 32,000 per share if MOL dismantled its defenses and again noted this was far in excess of the level at which MOL stock was trading. MOL shares rose 2.2% to Ft 22,885.

 
SHAREHOLDER OR RIVAL?
Hernádi questioned whether OMV - its regional rival in refining and retailing oil - was acting in the best interests of MOL holders. “I must raise the question... (whether) this is the voice of a competitor or this is the concern of a shareholder,” he said in response to OMV’s questions. The standoff between MOL and OMV began last summer when OMV doubled its MOL stake and said it would make a bid for MOL on condition that the firm dismantled its takeover defenses.

MOL rejected the proposal, saying it was hostile and would destroy shareholder value. It has fought the approach by amassing control over its own shares or selling them to friendly investors. It has won the backing of the Hungarian government which drafted legislation to protect the company, although that is being reviewed by the European Commission on competition grounds.

OMV has said it may take legal action to unlock MOL’s stock lending agreements with what it says are friendly banks and companies, and to seek to lift a voting cap of 10%, which prevented OMV from voting with half of its 20% stake. “Now, it’s off to the courts,” said Attila Vágó, an analyst at Concorde Securities in Budapest. “MOL had home field advantage today.” (Reuters)

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