M&A

18 November, 2009

UPDATE 2-Austria's OMV drops Petrol Ofisi takeover plan

* Drops plan to increase stake, gives no reason

* Has previously warned row with authorities delaying deal

* Companies agree to "stable partnership" (Adds detail, background)

VIENNA, Nov 18 (Reuters) - Austrian energy group OMV (OMVV.VI) has dropped its plan to take full control of Petrol Ofisi (PTOFS.IS) after warning that a row between the Turkish group's owner and local authorities could delay such a deal.

OMV said in August it wanted to increase its 42 percent stake in the petrol retailer to help develop Turkey its third strategic centre, after Austria and Romania.

But on Wednesday OMV said it had ended talks to buy Dogan Holding's (DOHOL.IS) stake in Ofisi, worth around $1.5 billion. It did not give a reason.

"Both companies now agreed to continue their stable partnership in Petrol Ofisi," OMV said in a statement.

Dogan's media arm, Dogan Yayin (DYHOL.IS), has been slapped with a record $3.3 billion tax fine by the Turkish government, threatening the group's survival in what Dogan says is a politically motivated move by Turkey. [ID:nLN587973]

OMV's chief executive warned last month that the tax row, which does not affect Petrol Ofisi's business directly, was delaying his company's plans to increase the stake. [ID:nLN563187]

OMV, which has around $5.5 billion in its coffers which could be used for acquisitions, had been hoping to develop Turkey as a bridge between Europe and oil and gas-producing countries.

Some analysts questioned the logic behind OMV's goal to take over Petrol Ofisi, saying it made more sense for the Vienna-based group to chase upstream assets.

They also questioned the speed with which OMV went after the deal after having its fingers burnt in two other takeover attempts.

One of the biggest companies operating in emerging Europe, OMV acquired Romanian Petrom SNPP.BX in 2004 but was badly hit by a botched takeover of Hungarian rival MOL MOLB.BU and had difficulty in Austria where it tried and failed to acquire utility Verbund (VERB.VI). (Reporting by Eva Kuehnen in Frankfurt and Sylvia Westall in Vienna; Editing Bernard Orr)

Source: http://www.reuters.com