(Updates with Rahimkulov's share sale in para 16)
BUDAPEST (Thomson Financial) - Shares in central Europe's biggest oil firm MOL Nyrt soared today on speculation a takeover bid is on the cards, despite denials from Austria's OMV AG that it is seeking to unite with Hungary's largest company, as well as a firm statement from MOL's management opposing the move.
OMV said in a statement that it had almost doubled its stake in MOL to 18.6 pct, sending MOL more than 5 pct higher and boosting shares in oil companies in neighbouring Poland.
'The news is extremely bullish for MOL stock. It looks like at least three parties are buying MOL stock now: (Russian businessman) Medget Rahimkulov, OMV and MOL itself,' said analysts at Erste Bank.
MOL executives again signalled they were not in favour of a deal and OMV chiefs told a morning press conference it had raised its stake to position better for the consolidation it expects in the region's oil and gas sector rather than for a takeover bid.
At a press conference, chief executive Wolfgang Ruttenstorfer said OMV wanted to engage MOL's management in 'structured discussions on co-operation -- nothing more', adding that 'now is not the time to discuss fusions'.
But he added that he did not rule out consolidation between the two companies in the future.
This afternoon MOL issued a firm statement declining talks and saying that the move would destroy value and that it would not agree to a tie up with a company in which there was strong state influence and ownership.
'It is the conviction of MOL's management that closer union and synergies between the region's two largest oil companies would mean the loss of competition in the region which is obviously not beneficial and does not offer value in the Central European space and to those connected with it,' MOL said.
Adding, 'As before, MOL does not support a partner in which there is strong state influence and ownership ... MOL will continue its own strategy and does not wish to conduct talks on a strategic union.'
Brokerage CAIB said the merger remained unlikely due to MOL's previous opposition to the deal, the fact that OMV is state-controlled and competition issues. But it said the Austrians did not have to lose out on the share purchase.
'For OMV, this is a risky strategy, as the success of its approach is uncertain,' they said in a note to clients.
'MOL cannot be taken over in a hostile way, only if its management supports it. Nevertheless, OMV probably can not lose too much, since some may be happy to take over its 18.6 pct stake in a worst-case scenario.'
However the share price continued to soar through the afternoon at 4.23 pm, MOL was up 8.06 pct at 28,960 forints helping the BUX index to a rise of 2.92 pct.
Analysts say that seperately, MOL and state-controlled Polish firm PKN Orlen, who abandoned efforts to merge three years ago, lack the clout to resist the advance of oil majors into central Europe.
Yet, while Polands government has put cutting its dependence on Russian oil and gas at the top of its list, MOL has come to terms with Moscow and has strategic ties with Russia's Gazprom.
Speculation around a takeover has been rampant in recent days, especially after MOL announced a share buyback program for 10 pct of stock at the end of last week, widely interpreted as a defensive move.
Russian businessman Medget Rahimkulov also upped his stake recently, fuelling speculation that a Russian major may be among suitors, although Erste Bank analyst Tamas Pletser was sceptical.
'The Russians are interested in central Europe but I don't think it is their first priority. Gazprom and Rossneft are under-capitalized and are busy on their own investment project, although Lukoil could be a possible partner,' he said.
Also, earlier in the day Rahimkulov annonced in a disclosure that he had sold practically his entire holding of around 6 pct in MOL to Vienna Capital Partners, who in turn sold it on to OMV.
MOL's management is in a position to stop a bid as it holds around 26 pct of stock, while under the company's statute OMV's raised stake does not give it more voting rights.
'OMV put out a rather plaintive statement saying 'Come on MOL's management, please talk to us' - the ball is now in MOL's court to come out and give an opinion,' said an analyst with another major investment bank, asking not to be named. edward.krudy@thomson.com ek1/jms/ek1/pjg/gp/ek1/jfr/ek1/dca COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.