Anti-takeover law to be approved in Hungary

Photo: Anti-takeover law to be approved in Hungary

Anti-takeover law to be approved in Hungary

It would be harder for the companies deemed crucial to national strategic interests to fall victim to hostile takeovers if Hungary 's parliament approves the new legislation.

The new law is known informally as "lex MOL," named after Hungary's oil company and covers energy and water supply firms.

OMV, MOL's Austrian counterpart, owns more than 20 percent of MOL's shares and last month said it was ready to make a buyout offer for the Hungarian firm.

Analysts at Citibank said the proposed legislation would mean that "OMV will find insurmountable obstacles to its intent to control its Hungarian neighbor."

MOL and the Hungarian government - which still holds a special share in MOL giving it a say in some key issues - have rejected OMV's overtures.

Socialist Prime Minister Ferenc Gyurcsany described the proposed deal as a "hostile buyout," while MOL said OMV's offer "substantially undervalues MOL's businesses and prospects."

Among other protective measures, "lex MOL" limits the voting rights of an individual shareholder or shareholder group to 10 percent of the total regardless of the size of the stake held in the company.

It also allows companies to buy back their own shares, even after a public buyout offer has been made, while prospective buyers are limited to one public bid for the company every six months.

Bidding companies would also need to gain approval for their business plan from shareholders before submitting their bid to PSZAF, Hungary's capital markets watchdog, and the sale of the company's main assets also would need shareholder approval.

MOL shares were trading at 27,670 forints (EUR110.75, US$156.06) at 1200 GMT on the Budapest Stock Exchange, down 0.5 percent on its Friday close. OMV's September offer was for 32,000 forints (EUR128.07, US$180.49) per share.