OMV drops merger proposal with Mol

Uchenna Izundu
International Editor

LONDON, Aug. 7 -- OMV AG has abandoned its unsolicited $23 billion bid for Hungary's Mol Rt. because it is unhappy with the conditions set by the European Commission, claiming that they undermine the deal.

The move ends a year-long battle between the companies that had begun to affect OMV's share price.

OMV described the EC's demand to sell a refinery as "unacceptable" as the EC had sought to minimize the concentration of refining capacity across central and Eastern Europe.

It had offered to sell some of its retail petrol stations and third party access to a new refinery centre where it could share capacity with OMV, but this was rebuffed by the EC.

The company wanted to integrate the Schwechat and Slovnaft refineries into one complex as they are only 55-km apart. OMV said that independent buyers could sell products at highly competitive terms and access significant refining capacity and products, crude transport facilities, and storage infrastructure.

The commission said it had been willing to discuss more detailed submissions from the parties, but no formal proposals had been made.

OMV justified its merger partly on the basis that this would create a regional champion to meet the changing developments in the energy markets. It has decided to keep its 20.2% stake in MOL for the time being.

Mol, which had fiercely contested OMV's bid, said the company's withdrawal showed that Mol had been right about the antitrust issues.

Contact Uchenna Izundu at uchennai@pennwell.com.

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