Megdet Rahimkulov, Russian-born billionaire businessman and active investor in Hungarian assets, has been increasing his stake in oil and gas group MOL recently. He and his family now own more than 5% of the company, exactly 5.847%. Portfolio.hu has asked the analysts of key foreign investment banks to find out what Rahimkulov's intention with MOL could be. While they have different views on the potential interest of Russian oil firms in MOL, they agree that Austria's OMV is unlikely to buy MOL shares in the near future. A strategic partnership, however, may be possible, they believe.
Below you find an interview with Alex Brooks, equity analyst at UBS and comments by an analyst of another major investment bank, who talked to Portfolio.hu only on the condition of anonymity. 
| Alex Brooks, UBS | 1/2 next page → |
Portfolio.hu: What is your take on Rahimkulov building up his stake in MOL recently?
Alex Brooks: We're not familiar with Rahimkulov's investment strategy. We note that MOL is one of the cheapest oil stocks in Europe, and that the company is highly cash generative.
Portfolio.hu: Can a Russian oil company acquire a considerable holding in MOL in the near future? If the answer is yes, how?
Alex Brooks: We are not aware of any Russian majors that have a current interest in acquiring MOL. The only potential candidate is Lukoil, which has in the past expressed an interest in central European refining, but which has more recently claimed that prices for the refineries are too high.
Furthermore, Lukoil are also arguing that in the medium term, the Brent-Urals spread - important for MOL's profitability - will narrow substantially, therefore making any investment in MOL less profitable.
Whilst we do not agree with Lukoil's analysis, we believe these statements indicate a lack of current interest. Amongst the other major Russian oil & gas companies, Gazprom cannot afford to buy MOL and retain its current investment grade, whilst Rosneft and Surgutneftegaz have a stated strategy to remain within Russia.
Finally, we note two features of MOL's share capital: (1) 23% of shares outstanding are primarily influenced by management; and (2) voting rights for all shareholders are capped at 10%. These two points mean it is virtually impossible to attempt a hostile acquisition of the company.
Portfolio.hu: Do you find it possible that OMV will decide to up its MOL stake in the next few months?
Alex Brooks: OMV have given no indication that they intend to increase their stake. We note that further share purchases by OMV would not change their voting rights in MOL, which are capped at 10%.
Portfolio.hu: Do you think it realistic that MOL will enter a strategic partnership with one of its peers, e.g. OMV or a Russian oil company?
Alex Brooks: A strategic partnership is possible - indeeed, MOL has already announced a strategic partnership with Gazprom. Talks between OMV and MOL have been on and off for many years, without reaching resolution.
Portfolio.hu: What would make it do that?
Alex Brooks: MOL is a small company in a large global industry, and although it has a number of profitable niches - principally its Slovakian and Hungarian downstream businesses - it is sub-scale relative to its global competitors. A partnership is one common way for smaller companies to overcome this size disadvantage.
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| 1. Alex Brooks, UBS |
| 2. Analyst No.2 |
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