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. Last Updated: 07/27/2016

MOL Suspects OMV Was Surgut Front

OMV's sale of its stake in MOL to Surgutneftegaz earlier this week raises the suspicion that the Austrian oil and gas company was always just a front for the Russian group, Hungarian refiner MOL said Wednesday.

"If you look at the numbers, OMV's sales price is almost to the penny its input price, that is, its purchase price plus interest minus dividends, you know the formula," MOL executive chairman Zsolt Hernadi said.

"Suspicion arises … that because the Russian investor bought this stake at exactly the input price, [OMV] was just a front," Hernadi told the parliament's Foreign Relations Committee.

"We don't know," Hernadi said.

A Surgut spokeswoman declined to comment on the claim.

Cash-flush Surgut, Russia's fourth-largest oil producer, said Monday that it would buy 21 percent of MOL from OMV for 1.4 billion euros ($1.9 billion), or nearly twice MOL's trading price on the Budapest bourse on the previous Friday.

The Russian company, which refines less than 40 percent of its own oil, said in a statement announcing the purchase that it intended to boost its access to end consumers in Europe. MOL immediately rebuffed the intentions, saying it considered Surgut a "financial investor" and that it had not been consulted in the deal.

Its voting rights will be limited to 10 percent under Hungarian law, which also gives the government a "golden share," or preferential voting rights.

"This can never become a friendly approach, it will never be considered friendly," Hernadi said. "The question is whether we'll consider it hostile or just uncoordinated."

OMV spokesman Thomas Huemer responded to Hernadi's comments by quoting part of an article from Tuesday's edition of Austrian daily Die Presse.

"During the summer of 2007, MOL CEO Zsolt Hernadi … made it clear to OMV that he would rather sell to any Russian oil giant instead of to OMV," the paper said in its report.

"Now nine years since OMV first showed interest in the Hungarian rival, his wish has been fulfilled."
OMV's sale came after MOL spent much of 2007 and 2008 successfully repelling a takeover attempt by OMV.

"I have to agree with the Alfa Bank trader who said he'd love to hire that salesman who can sell a 21 percent financial investment at a double the market price," Hernadi said, referring to comments by Alfa's chief strategist, Ronald Smith.

MOL earlier said Surgut has not coordinated its purchase with the company and that MOL would continue to seek an independent strategy.

Both Hungary's government and opposition said they supported MOL's independence and promised to do all they can to prevent Surgut from taking over the company.

(Reuters, MT)