Mol, the Hungarian oil and gas group, has announced new share buy-backs that brought the level of company shares under its direct and indirect control to 35 per cent, analysts estimated.
The news came as Zsolt Hernadi, Mol’s chairman and chief executive, vowed to defend his company’s independence against a takeover attempt from Austrian rival OMV.
In an interview with the Financial Times, Mr Hernadi said a tie-up with OMV would destroy shareholder value by forcing the merged company to sell significant assets at the refining, wholesale and retail levels.
“In three countries, we would have a nearly 100 per cent monopoly,” he said. “We are overlapping companies, not complementary.”
Mr Hernadi also firmly dismissed rumours that Mol would consider a counter-offer from a Russian bidder.
He said reports in the Russian press that Lukoil could emerge as a white knight were based on a misunderstanding of his recent comments that Mol would welcome co-operation with a Russian partner, such as Lukoil or Rosneft.
“We could create a lot of synergies with a Russian partner but this would definitely not be on the corporate level,” he said.
OMV revealed on June 25 that it had raised its stake in Mol from 10 per cent to 18.6 per cent and proposed “friendly” talks on a possible merger.
Mol immediately treated the approach as the start of a hostile takeover attempt.
Ironically, Mr Hernadi has been assisted in defending his company by a document entitled “Mol Takeover Defence”, prepared for Mol by JPMorgan, the US investment bank, when it was advising the company in 2002.
JPMorgan is now advising OMV in its bid for Mol.
The Hungarian government has backed Mol’s resistance. It plans to introduce legislation that would allow it to block companies controlled by foreign governments from taking over Hungarian companies with strategic assets.
OMV is 31.5 per cent state-owned. An additional 17.6 per cent is owned by IPIC, an Abu Dhabi investment vehicle that is obliged to vote with the Austrian government.
Mr Hernadi defended the company’s strategy of buying back shares, which has been criticised by some analysts.
“People are saying this is being done in the interest of management,” he said. “But I am totally convinced this is in the shareholders’ interest.”
The company has said it will propose cancelling those shares at the next general meeting next spring, which would increase the value of remaining shares.
It has also announced a sharp increase in dividends, another move designed, analysts said, to prevent shareholders from backing OMV.
Mr Hernadi laid out several additional arguments for rejecting OMV’s bid, portraying Mol as the better managed company.
He presented figures showing that Mol’s market capitalisation and profit – adjusted to strip out the effect of rising oil prices – had grown much faster since 2000 than the same figures at OMV.
And while Mol’s pursuit of acquisitions, including smaller oil companies in central Europe and upstream assets in Russia and Central Asia, had stalled, Mr Hernadi said the company was “working hard” on deals both in and outside the region.
Additional reporting by Ed Crooks in London