Morgan Stanley is set to miss out on lucrative advisory fees on one of Europe’s largest potential takeovers this year, after stepping down from the defense mandate for Hungarian oil company MOL, witch is the subject of a €41 billion ($19.7 billion) hostile offer.
Morgan Stanley dropped out of the defense mandate for MOL in July, leaving UBS as the Hungarian company’s sole adviser against an unsolicited offer from Austrian energy rival OMV. However, Morgan Stanley retains a general advisory mandate. MOL and Morgan Stanley declined to comment on the reasons for the split. One source familiar with the situation said it was “nonsense” to suggest there had been a dispute between the two. However, according to a banker working on the deal, Morgan Stanley’s decision to step down from the mandate was the result of a disagreement over MOL’s defense strategy. He said: “The impression we got was Morgan Stanley wasn’t prepared to give the advice MOL wanted.”
Morgan Stanley’s departure leaves only UBS in line to receive defense fees from advising MOL on OMV’s offer, which has yet to be formally tabled. The decision to step down from the mandate came shortly after the announcement in late June by OMV that it held 18.6% of MOL’s shares, now 20.2%, which prompted the Hungarian company to embark on a large share buyback program that has left it in control of about 40% of its stock.
OMV, which is offering MOL shareholders close to a 19% premium to Monday’s closing share price, is asking MOL to cancel a large number of the shares its holds. It is also looking to remove a 10% voting limit in the company’s share charter, which prevents any one individual or organization from voting more than this proportion of the share capital. The management of OMV is set to meet with MOL shareholders over the next days to discuss its plans and to put pressure on MOL’s management to discuss the combination. Deutsche Bank and JP Morgan are advising OMV, while Merrill Lynch is understood to be advising CEZ, a Czech utility, on the purchase of a 10% holding in MOL. (efinancialnews.com)