January 10, 2008 / 11:43 AM / 10 years ago

Hungary's Emasz shares rise on buyout speculation

BUDAPEST, Jan 10 (Reuters) - Shares in Hungarian electricity firm Emasz EMAS.BU rose on Thursday on market speculation that its German owners may decide to boost their stake so they can squeeze out other shareholders and delist the firm.

Germany's RWE (RWEG.DE) and Energie Baden-Wuerttemberg (EBKG.DE) together own over 80 percent of Emasz and they also have respective stakes of 55.26 percent and 27 percent in another local electricity firm, ELMU ELBU.BU.

At 1135 GMT Emasz was up 3.64 percent at 25,910 forints ($149.9) per share while the Budapest bourse's BUX index .BUX was down 0.68 percent.

Speculation about Emasz rose as RWE said it planned to boost its stake in ELMU, and some analysts said a logical next step would be to boost its stake in Emasz as well.

RWE said on Wednesday that it planned to increase its stake in ELMU with the help of investment bank WestLB, but did not say who it would buy the shares from.

Later on Thursday the Budapest city council will announce the result of a tender in which it will sell its 10.5 percent stake in ELMU.

RWE said if it boosts its stake in ELMU and a public purchase offer obligation arises, it will make a bid.

Once the joint stake of RWE and EnBW rises above 90 percent, they can squeeze out other shareholders and delist ELMU.

"(In this case) it would be a rational step to delist Emasz as well," said Kornel Sarkadi, analyst at Cashline.

"This is only speculation at this stage, market talk which moved a relatively illiquid share, even though there is a chance (for this to happen)," an equity trader said.

Brokerage Concorde also said in a note that a delisting of ELMU may encourage RWE and EnBW to pay a premium for shares in Emasz to boost their stake above 90 percent.

Concorde rates Emasz a "strong buy", with a target price of 30,750 forints per share. (Reporting by Krisztina Than, editing by Will Waterman)

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