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OMV Aktiengesellschaft

euro adhoc: OMV Aktiengesellschaft
Mergers - Acquisitions - Takeovers / Declaration of Intent to combine OMV and MOL

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
Energy/Oil/Gas/Austria/OMV/MOL/Hungary
25.09.2007
- OMV is in a position to offer HUF 32,000 per MOL share in cash with
a partial share alternative - However, due to a number of technical 
impediments OMV is unable to achieve voting control of MOL at the 
present time. Therefore, OMV is seeking to engage in active 
discussions with key MOL stakeholders - OMV committed to all 
stakeholders: combined business would be listed in Austria and 
Hungary with strong Hungarian Board representation
On June 25, 2007, OMV announced that it had increased its ownership 
in MOL to 18.6%. Today, OMV holds 20.2% in MOL. These additional 
shares were acquired to strengthen a strategic investment in a 
business that OMV has long held in high regard and to also pave the 
way for longer term cooperation between the two companies. The Board 
of OMV believes that the combination of OMV and MOL presents a unique
strategic opportunity to create one of Europe´s leading integrated 
oil and gas companies, with a focus on the fast growing regions of 
Central and Eastern Europe.
The rationale for a combination of MOL and OMV has already been the 
subject of discussions with MOL´s management. Following conversations
between the CEOs of OMV and MOL on June 15, 2007, OMV sent a letter 
to MOL´s Board on June 25 detailing, in particular, a full cash offer
at a significant premium, as well as attractive terms for a 
combination.
OMV is today in a position to make an offer to the shareholders of 
MOL of HUF 32,000 per share. However due to a number of technical 
impediments, including the 10% voting restriction in MOL´s Articles 
of Association and MOL management´s effective control of shares in 
MOL which many in the financial markets believe now amounts to 
control over approximately 40% of the shares established through the 
use of various structural arrangements (a situation that has not been
refuted by MOL), OMV is unable to achieve voting control in MOL at 
the present time. OMV is therefore seeking to engage in active 
discussions with the independent shareholders, the European 
Commission and other stakeholders in MOL. The removal of these 
impediments would allow MOL´s independent shareholders to decide on 
the merits of the offer. So far MOL shareholders have been denied 
this choice through the actions of MOL´s Board.
As a first step in that direction, a letter along with this 
Declaration of Intent has been sent today to MOL´s Board of 
Directors. The Board of OMV reiterates its invitation to MOL´s Board 
to enter into a constructive dialogue, with the ultimate objective of
realising a combination which would enhance the strengths of both 
companies and benefit all stakeholders. This announcement sets out 
the rationale for the combined group, the commitments that OMV has 
offered to the Hungarian Government via a letter to the Prime 
Minister and the key terms and conditions of our proposed offer.
Speaking on behalf of OMV´s board, Wolfgang Ruttenstorfer, CEO of 
OMV, said today: "With the accession of CEE countries to the EU, the 
time has come to think beyond national interests and find regional 
solutions to the issues surrounding the highly competitive oil & gas 
industry. That is why we have chosen to invest further in MOL and 
have been seeking to advance the informal discussions we have had 
with MOL´s management over the years as well as to initiate 
discussions with the Hungarian Government". Mr. Ruttenstorfer added: 
"The combination of OMV and MOL would create a CEE champion, whose 
history embraces the legacy of MOL and OMV and builds upon the best 
characteristics and opportunities of both. It would ensure a better, 
stronger future for our businesses and allow us to compete globally 
in E&P and can contribute to the security of supply of oil and gas 
for the region. At the same time, our offer would create immediate 
and tangible value for MOL shareholders and the combined business 
would create a platform from which to deliver significant shareholder
returns in the future." "Following this declaration, which outlines 
the value and terms of our proposed offer, together with the 
significant commercial, strategic and competitive benefits of a 
combination, we will engage directly with MOL's key stakeholders to 
explore ways through which these benefits can be realised."
Strategic rationale for a combination of OMV and MOL
The Board of OMV believes the combined entity would be very well 
positioned to capture the growth opportunities available in CEE and 
that there will be significant value creation from the optimisation 
of the combined group´s assets. In addition the region will benefit 
from the presence of a major oil and gas company committed to the CEE
region as its core market. OMV believes that the benefits of the 
combination will include:
1. Enhanced growth opportunities OMV-MOL will have the scale to 
compete more effectively with Europe´s major integrated oil and gas 
companies, positioning it well to take advantage of enhanced growth 
opportunities. In particular OMV-MOL´s focus will be on the high 
growth CEE/Danube basin region. This region, with average GDP growth 
of approximately 3.4% per year and automotive fuel products demand 
growth of approximately 1 mn tons per year since 2004, continues to 
offer substantial opportunity for further development. Furthermore, 
by combining their international operations, know-how and expertise, 
OMV-MOL can compete far more effectively for growth in the upstream 
sector.
2. Optimisation of asset base An immediate benefit of the combination
with MOL will be in the creation of a more efficient downstream 
logistics network. OMV believes that this efficiency, together with 
optimisations both at corporate level and in the upstream, gas and 
petrochemical divisions, will help the combined group to deliver 
total pre-tax synergies of approximately EUR 400 mn per annum 
identified to date by OMV. In addition, the combination of OMV´s and 
MOL´s upstream operations brings together their respective expertise 
in the mature fields of the Danube basin to enable the combined group
to better capture the most attractive opportunities and maximise the 
value of their existing infrastructure.
3. Security of energy supply to the region The combination of OMV and
MOL will significantly enhance security of energy supply throughout 
the region for the combined group through both greater 
diversification of crude oil supply, as well as the greater scale in 
upstream to generate additional growth of the combined resource base.
Through providing significant strength to the combined group in 
ongoing fuel supply it will also increase security for the whole 
region. In addition, in terms of gas supply the combination will 
facilitate the realisation of major infrastructure projects such as 
the Nabucco pipeline, which will greatly enhance security of gas 
supply to the region.
OMV´s commitment to Hungary
OMV is committed to combining and strengthening the best elements of 
both OMV and MOL. In particular, OMV proposes to retain and build on 
the leading position that MOL has in Hungary and has indicated to the
Hungarian Government that it is willing to discuss a number of 
measures that reflect the importance of Hungary to the combined 
group. The measures proposed to the Hungarian Government include: 
-joint representation on the new combined Supervisory Board, with 2 
Hungarian representatives equal to the 2 representatives from 
Austrian ÖIAG; -creating a new senior management team that takes the 
best talent from both companies and implementing a joint talent 
program for the next generation of leaders; -locating the headquarter
functions of the largest business division in Budapest along with a 
number of other corporate support functions; and -in many other 
respects such as name, language, brand, job numbers, investor 
coverage and tax payments as well as investments, our key objective 
would be equality of treatment between Austrian and Hungarian 
stakeholders.
OMV has a track record of continued investment in countries in which 
it has pursued combinations. For example in Romania OMV is investing 
around EUR 900 mn per year in the period 2007-2010 to enhance both 
the upstream and the downstream business of Petrom.
Proposed offer
The Board of OMV is prepared to offer to MOL´s shareholders HUF 
32,000 per share of MOL in cash once the impediments to achieve 
voting control of MOL have been removed. This price represents a 
43.6% premium to MOL´s unaffected share price of HUF 22,290 on May 
21, 2007, the day before speculative investments in MOL started, and 
an 18.7% premium to the share price at the close of business last 
night. In addition, OMV is prepared to offer up to 25% of the 
consideration in the form of OMV shares. The impediments that are 
restricting OMV´s ability to achieve voting control of MOL include 
the 10% voting limitation in MOL´s Articles of Association and MOL 
management´s effective control of around 40% of the shares in MOL 
through the use of various structural arrangements.
Once -the 10% voting limitation is removed and -the shares under 
management control are cancelled or this impediment is otherwise 
resolved in a satisfactory way,
OMV´s offer will be conditional solely on
-securing at least 50% voting control of MOL and
-securing EU anti-trust approval.
OMV has undertaken an antitrust pre-notification process with the 
European Commission. Detailed analyses and discussions to date 
indicate that some disposals will be required from the combined 
entity. However OMV believes that such disposals will not materially 
impact the attractiveness of the combination. OMV has already lined 
up a syndicate of banks to provide financing for the proposed 
transaction. The terms outlined above are based on the assumption 
that neither the Hungarian Government nor the MOL Board take any 
actions that could have a material adverse effect on the economical 
rationale of the transaction or that could frustrate any offer in any
other manner. The Board of OMV believes that the combination is in 
the interests of all stakeholders in MOL and OMV, and will therefore 
be actively seeking to engage in discussions with key stakeholders 
with a view to achieving the removal of the technical impediments. 
The removal of these impediments would then enable the independent 
shareholders of MOL to be in a position where they can decide on the 
merits of our offer.
end of announcement                               euro adhoc 25.09.2007 07:00:00

Further inquiry note:

OMV
Investor Relations:
Ana-Barbara Kuncic
Tel. +43 1 40 440-21443; e-mail: investor.relations@omv.com
Press:
Bettina Gneisz-Al-Ani
Tel. +43 1 40 440-21660; e-mail: bettina.gneisz@omv.com
Thomas Huemer
Tel. +43 1 40 440-21660; e-mail: thomas.huemer@omv.com

Internet Homepage: http://www.omv.com

Branche: Oil & Gas - Downstream activities
ISIN: AT0000743059
WKN: 874341
Index: ATX Prime, ATX
Börsen: Wiener Börse AG / official dealing

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