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ATHENS, Dec 7 (Reuters) - Greece limited private ownership in strategic state-controlled companies on Friday, in a move analysts said aims to protect telecoms group OTE from a buyout fund whose biggest shareholder is based in Dubai.
The conservative government said the law would come into effect immediately, stopping any investor from buying more than 20 percent of companies such as OTE OTEr.AT and energy utility Public Power Corp (PPC) DEHr.AT without government approval.
“This is an important statutory regulation for our country and for securing the public interest,” Finance Minister George Alogoskoufis told reporters.
Marfin Investment Group (MIG) said earlier on Friday it had raised its stake in OTE to 18.45 percent. Analysts said the law was designed to prevent Marfin from increasing its stake in OTE and gaining management control of the company.
“This law is targeted to block MIG’s moves on OTE. No one else has near 20 percent in any other strategic Greek company,” said an analyst who declined to be named.
MIG has continually said it has no interest in gaining control of OTE but Greek politicians have in the past expressed concern it would be the target of a hostile takeover.
MIG raised 5.2 billion euros ($7.6 billion) through a rights issue in July and has said it plans to start investing in various sectors. Apart from telecoms, it has holdings in banking, healthcare and real estate.
Earlier this year it bought control of Greece's largest ferry operator Attica Enterprises EPAr.AT and the country's largest food group Vivartia VIVr.AT. MIG is about 20 percent owned by Middle-East holding company Dubai Financial Group.
RUFFLING FEATHERS
But MIG has ruffled feathers by increasing its stake in OTE, seeking a seat on the board as the largest shareholder after the state and calling for a shareholders’ meeting to get details on a multi-billion-euro deal to buy out its mobile arm -- a deal MIG says may not necessarily be in shareholders’ interests.
Greece has sought a strategic investor for OTE but has had no luck and resorted to privately placing small stakes. The state has about 28 percent in the profitable company, which has expanded in the Balkans with success.
MIG and OTE shares fell on the Athens bourse on Friday after the government’s announcement, closing 3.6 percent and 4.7 percent lower respectively.
OTE shares have gained about 8.5 percent so far this year, slightly underperforming the Athens index .ATG which is up 16 percent. It trades at about 20 times 2007 earnings, on a par with European peer Deutsche Telekom AG DTEGn.DE, which trades on about 21 times according to Reuters Estimates.
The government has said it would share control of OTE only with a major European peer. But the law may hit a protectionism snag at European Union level.
The European Commission is debating how the bloc should deal with Germany’s call for measures to protect domestic companies from the influence of foreign state-owned funds from countries such as China, Russia and Middle Eastern states.
The EU says there are good reasons for a common EU and international approach, but that there is a need to avoid all forms of protectionism.
“The government may not get away with this. (Germany) is trying something similar and it’s still uncertain,” an analyst said. “You either want a free market and increased foreign investment or you don’t. You can’t have your cake and eat it.” (Additional reporting by Stelios Bouras; Editing by David Holmes)
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