CE Oil buys big stake in BorsodChem

Russian energy group Gazprom appeared yesterday to have strengthened its control of Hungary's second largest chemicals firm BorsodChem via a buyout by Austria's CE Oil & Gas.

Gazprom does not directly hold any stake in BorsodChem, but CE Oil & Gas and Russian petrochemicals firm Sibur, which has 24.8 per cent of BorsodChem, are seen as Gazprom allies.
Gazprom owns 38 per cent of Sibur.

CE Oil & Gas, which offered 5,300 forints per share in June for the 83.9 per cent of BorsodChem it did not already control, said yesterday it had added a further 43.17 per cent of the Hungarian company, taking its total holding to 59.27 per cent.

But CE Oil & Gas, owned by an Austrian venture capital firm which has denied it is acting for the Russian monopoly, must first convince Hungary's competition regulator which, according to daily Napi Gazdasag, wants to take a closer look at CE Oil's background and strategic aims.

"Our offer was designed to put an end to all uncertainties ... and ensure the long-term future of BorsodChem," said Georg Stahl, who heads both CE Oil & Gas and BorsodChem.

"We are sure BorsodChem can now look forward to an even more prosperous and secure long-term future," BorsodChem Chief Executive Laszlo Kovacs added in a statement.

The European Bank for Reconstruction and Development (EBRD) said on Tuesday it offered its 8.61 per cent BorsodChem stake to CE Oil & Gas, while Russia's Interfax agency said Sibur had rejected the Austrian offer, which valued BorsodChem at a total of 64.6 billion forints.

BorsodChem itself had previously said it offered its own tiny stake of 19,746 shares to CE Oil & Gas.

In a separate move, Hungary's financial markets watchdog (PSZAF) said yesterday it had ended a near year-long investigation to see whether some BorsodChem shareholders had infringed Hungarian takeover rules which demand a buyout offer once any single stake exceeds 33 per cent.

PSZAF called for BorsodChem's major shareholders to be clearly identified after widespread speculation that Gazprom had raised its stake above 33 per cent via proxies.

However, analysts said the situation was still not clear even after the successful CE Oil & Gas offer. Many still wanted to know what links, if any, there are between CE Oil and Sibur.

"We still don't know who is behind (CE Oil) and we still don't know for sure what the relationship is with Sibur," said Tamas Pletser, analyst at Erste Bank Investment. "It does seem like there's some cooperation between them."

Pletser expected CE Oil & Gas to sell its BorsodChem stake in three or four years, probably to a strategic investor.

"The most likely scenario is that it will be Gazprom via Sibur," he said.