UPDATE: MOL Regards Surgut's MOL Stake Buy As Unfriendly
April 01 2009 - 9:40AM
Dow Jones News
Hungarian oil and gas company MOL Nyrt. (MOL.BU) said Wednesday
that Russian firm Surgutneftegaz's (SNGS.RS) purchase of an MOL
stake is an unfriendly step.
Surgut, Russia's fourth-largest crude oil producer, bought a
21.2% stake in MOL from Austrian oil and gas company OMV AG
(OMV.VI) for EUR1.4 billion earlier this week.
"This step just cannot be friendly. The question is whether it's
hostile or only unsolicited," MOL Chairman and Chief Executive
Zsolt Hernadi said at a parliamentary committee hearing.
MOL isn't planning to conduct any talks with Surgut, Hernadi
said. A Surgut spokeswoman only said that Surgut has had no talks
with MOL or the Hungarian government before or after the
acquisition.
MOL regards Surgut as a financial investor and Hernandi said
it's aware that "that Russian firms usually ...(aren't) satisfied
with a minority stake."
"When we saw on Surgut's Web site that they pursue vertical
integration, we raised our eyebrows - how can it do that as a
financial investor," Hernadi added.
Neither MOL nor the Hungarian government had prior knowledge of
the deal, underpinning the move's unfriendly nature, Hernadi and
the Hungarian government said.
"We want to send a message through this hearing that the
government is ready for all it takes to keep MOL's independence,"
Finance Ministry State Secretary Laszlo Keller, who was also
present at the hearing, said.
MOL, which emerged as victorious last year from a lengthy
takeover battle with OMV, now might be facing a mightier suitor in
Surgut, which some analysts say has close ties to the Kremlin.
Given that MOL has become a potential takeover target again,
there has been a rally in its share price, which gained 8.7% to
HUF10,800 ($46.96) by midday Wednesday since the deal was announced
Monday.
But a new takeover battle would lead to renewed worries over
corporate governance.
"We see considerable risks from the reaction of MOL and the
entry of a shareholder with a less predictable approach to
corporate governance," said UBS analyst Anish Kapadia in a note to
clients. Kapadia also voiced concerns over the fact that MOL
amassed over 40% of treasury shares over the past years in defense
against OMV.
"We believed that following the withdrawal of OMV's offer for
MOL, (MOL's) management will focus on running the business to
enhance shareholder value once again. However, following
Surgutneftegaz's purchase of OMV's stake there is the risk now that
the management shifts its focus back to the shareholding structure
and away from the core issues of the company," Kapadia said.
The risk to MOL in opposing Surgut is that it could potentially
suffer from cuts to its oil supply or encounter problems with its
assets in Russia, Kapadia added.
UBS maintained its buy rating on MOL with an unchanged target
price of HUF12,500, noting that MOL is less exposed to a fall in
refining margins due to its complex refining system and gearing to
upstream operations. MOL has high quality assets and strong growth
potential, especially due to its upcoming integration of INA
(INA.ZG), its Croatian refiner, UBS added.
MOL has strong takeover defenses in place in addition to its
treasury shares; it has a 10% voting limit and the Hungarian state
owns a single share in the company, with special veto rights.
Company Web site: www.mol.hu
-By Margit Feher, Dow Jones Newswires; +36-20-925-2364;
margit.feher@dowjones.com (Jacob Gronholt-Pedersen in Moscow
contributed to this story.)