OMV, Verbund propose $16.6 billion merger

By OGJ editors
HOUSTON, May 11 -- OMV AG and Austrian power company Verbund agreed to merge in a cash-and-stock transaction valued at €12.6 billion ($16.6 billion), subject to approval from shareholders and the cooperation of the Austrian government.

Terms calls for a 60-40 merger in which OMV plans to offer Verbund shareholders a choice of 6.5 shares of OMV stock/share of Verbund or €425/share in cash. Both companies are based in Vienna, which also will be the headquarters for OMV Verbund AG.

The transaction hinges upon the Austrian government's converting its 51% interest in Verbund to an OMV Verbund position at the rate of 6.5 OMV shares/share of Verbund.

Subject to regulatory and shareholder approvals, the transaction is expected to close in a complicated two-step process. Closing is expected by yearend, and Verbund is expected to be fully merged into OMV Verbund during 2007.

The integrated energy group will produce, transport, and trade oil, natural gas, and electricity. The company's combined gas production and gas supply contracts coupled with power generation will help secure Central Europe's energy supply, executives said.

The OMV Verbund board will consist of the seven previous board members of OMV and Verbund. The combined company will be directed by joint chief executive officers: OMV's Wolfgang Ruttenstorfer and Verbund's Hans Haider.