Hungarian government not planning MOL law change after EU threat

Issues

The Hungarian government on Friday said it currently had no plans to call off a vote on a law aimed at defending its largest energy firm MOL from foreign takeover after the European Commission threatened the government with legal action.

The Hungarian parliament is today expected to vote into law the so-called ‘Lex MOL’ bill, which is aimed at preventing foreign state-owned companies from taking over strategic Hungarian firms. State-owned Austrian energy firm OMV’s attempt to launch a hostile takeover of its Hungarian peer sparked the drive for the new legislation.

However, Internal Market Commissioner Charlie McCreevy on Thursday wrote to Hungarian Economy Minister János Kóka warning that he would push through a case against Hungary in the European Court of Justice if the law were passed. „If the actions or legislation currently envisaged by your authorities were to put an impediment on economic factors from other member states taking an interest in MOL, then I would be compelled to recommend that the Commission continues the existing proceedings to their conclusion in the court,” McCreevy wrote.

The existing case was filed in December after the government did not change laws deemed discriminatory against foreign investors. Kóka, however, insisted the new law did not break EU rules. „It’s not about protection against foreign investors,” he said. „It’s about protection against illegal hostile demands.” OMV has more months been pushing MOL to sit down at the negotiating table and last week offered Ft 32,000 ($179.5) per share, thus valuing the company at around $20 billion.

MOL’s board rejected the bid, saying it undervalued the company’s assets and prospects. The Austrian firm says it has identified annual synergies of €400 million ($546 million), but MOL says a merger would force the combined entity to divest significant assets in the region. OMV CEO Wolfgang Ruttenstorfer, however, claimed in an interview that the merged company would only have to sell off some filling stations. Several of MOL’s independent shareholders have come out in favor of talks with OMV, but so far the MOL board has refused to budge.

OMV’s offer was conditional on the board removing certain obstacles to the takeover, such as a rule limiting the voting influence any one party can have in the company to 10%. Changing the rules would require 75% of votes at an extraordinary general meeting, but the MOL board is now thought to have gained a voting influence of over 40% by lending shares to banks with close links to the energy firm’s management. (petrolplaza)

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