Sept. 25 (Bloomberg) -- OMV AG, central Europe's biggest oil company, made a hostile 2.8 trillion-forint ($15.7 billion) bid for Hungary's Mol Nyrt. to expand refinery production by 66 percent as fuel demand climbs.
OMV is ready to pay 32,000 forint a share in cash, 18 percent more than Mol's closing share price yesterday, the Vienna-based company said today in a statement. OMV, which already holds 20.2 percent of Mol, said it could pay partly in shares.
The Austrian company is going directly to shareholders after Mol's management rejected a merger proposal in June and the Hungarian government pledged to fight the offer. OMV Chief Executive Officer Wolfgang Ruttenstorfer, whose bid to combine with Austrian utility Verbund collapsed last year, would get access to refineries in Slovakia, Hungary and Croatia.
``This makes a lot of sense for OMV in the long run,'' said Alois Woegerbauer, who manages the equivalent of $7.9 billion at 3-Banken Generali Investment in Linz, Austria.
OMV shares dropped as much as 6.7 percent to 48.11 euros in Vienna, trading at 48.73 euros at 10:12 local time. Mol shares were suspended from the trading in Budapest and Warsaw.
A takeover would boost OMV's refining capacity to 43.2 million tons a year from 26 million tons. OMV said it expects annual savings of 400 million euros ($563 million) a year from the merger and has about 9 billion euros available from a group of banks for the transaction.
The Austrian oil company doubled its stake in Mol in June and called for merger talks, which were rejected. Mol management has been buying back stock to fend off OMV and now controls about 40 percent of its shares through options and loan agreements. Czech power company CEZ AS is also in talks to buy 10 percent of Mol.
``OMV is unable to achieve voting control in Mol at the present time,'' the company said in the statement. ``OMV is therefore seeking to engage in active discussions with the independent shareholders.''
Mol's spokesman Szabolcs Ferencz said the company will ``monitor'' the offer, declining to elaborate further.
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