OMV and MOL settle in for drawn out battle

By Balazs Koranyi and Karin Strohecker

VIENNA (Reuters) - Austria's OMV (OMVV.VI: 株価, 企業情報, レポート) is determined to press ahead with its takeover battle for Hungarian peer MOL, yet the only certainty about the outcome is that any solution will take a long time, possibly up to three years.

MOL's (MOLB.BU: 株価, 企業情報, レポート) management controls around 40 percent of its own stock and has the upper hand for now as it fends off OMV's unsolicited approach. But it, too, faces an uphill struggle as shareholders grumble and the EU prepares legal action.

OMV holds just over 20 percent of MOL and has said it will offer 32,000 forint ($181) per MOL share if MOL removes a 10 percent voting right cap and if it cancels or neutralizes the 40 percent stake its board and friendly institutions control.

The Hungarian firm has rejected the proposal, which would value MOL at up to $20 billion, saying a merger would destroy shareholder value and would not get regulatory approval.

To thwart OMV's efforts, MOL's management launched an aggressive share buyback while the Hungarian government passed new legislation aimed at protecting strategic sectors, which investors say was designed to protect MOL from OMV.

The European Union has criticized the new law, and OMV hopes to enlist that body's support to roll back the legislation, take away Budapest's special rights and force MOL's management to give up control over the 40 percent stake.

Last week, EU Internal Market Commissioner Charlie McCreevy wrote to the Hungarian government threatening to extend action against the country if the new law prevented companies from other EU states buying into MOL.