Hungarian oil firm MOL will sell 8% of its shares to Oman Oil Co (OOC) in a move analysts say will help it fight off a takeover approach and give it new access to upstream investment.
MOL Nyrt will sell 8.77 million of its treasury shares to the government owned Oman Oil Co, at around 25,237 Hungarian forints ($145.4) per share, or at a 10.7% premium compared to the stock’s current trading price, and would also take over some of OOC’s international assets, MOL said in a statement. Analysts said the move makes business sense as its gives MOL, which has a market capitalization of $14.5 billion, access to coveted upstream opportunities, frees up cash locked up in treasury shares and protects it from a hostile takeover approach by Austrian oil firm OMV. “Oman is a relatively small sultanate and doesn’t have the major players Kuwait or Saudi Arabia does so a company of MOL’s size has a realistic chance to enter,” ING oil sector analyst Tamás Pletser said. At 0940 GMT, MOL stock was down 0.2% at 22,800 forint as the global environment weighed on the stock, traders said.
OMV, which owns 20.2% of MOL, last year proposed the merger of the two firms and said it would pay 32,000 forint per MOL share if the Hungarian company dismantled its anti-takeover defenses, including a 10% voting cap which keeps OMV from voting with most of its shares. MOL rejected the approach saying it would create a near-monopoly in refining, marketing and retail in Austria, Hungary and Slovakia and would therefore destroy shareholder value. MOL protected itself through gaining control over around 44% of its shares through options, treasury shares and allies, including Czech utility CEZ, which took a 7% stake. “But these options and lending agreements are expensive and can’t be maintained forever so MOL needs to go in a direction of finding new investors, who will hold on to their stake and are friendly to the management,” ING’s Pletser said.
The European Union last week launched an in-depth probe of OMV’s proposed takeover to determine if there were competition issues and set a July 22 deadline for a ruling. OMV has meanwhile submitted a series of motions to MOL’s April 24 shareholder meeting to unwind most of MOL’s defenses. KBC Bank’s oil sector analyst Péter Tordai agreed, that the significance of Monday’s move was to thwart OMV’s approach. “The rationality of the deal is clear for us: MOL aims to create an ownership structure, which saves it from the hostile takeover of OMV,” Tordai said. “Since the deal frees up the value what MOL locked into treasury shares, we consider the move as positive.”
“This transaction doesn’t change OMV's position” and the takeover offer would still benefit Mol shareholders, Thomas Huemer, a spokesman for the Vienna-based company, said Monday by e-mail. (Reuters)