Mol Dives as Sale Plan Escalates INA Dispute: Budapest Mover

Mol Nyrt. fell to a two-year low after Hungary’s largest refiner warned it may sell its INA Industrija Nafte d.d. unit as talks with the Croatian government over management rights in the company stalled.

The shares slid 2 percent to 14,400 forint by 10:05 a.m. in Budapest, the lowest level on a closing basis since September 2011 and extending the decline this year to 19 percent. The benchmark BUX stock index, in which Mol has a 29 percent weighting, retreated 1 percent, paring its advance in 2013 to 3.3 percent.

Mol’s board of directors authorized management to start preparations for the sale of Mol’s stake in INA, the Budapest-based company said in a statement after the close of trading on Nov. 8. The statement signals a potential deterioration in the dispute between Mol and Croatia, which had complained that Mol runs INA as a subsidiary rather than an independent company, according to analysts at Buda-Cash Brokerhaz Zrt.

“The comments may be interpreted as Mol escalating the pressure after a not-too-successful round of negotiations recently,” Peter Fazekas and Gergely Palffy, Budapest-based analysts at Buda-Cash, wrote in an e-mailed report today. “Mol more or less admitted that the talks aren’t going too well, which is negative for the stock.”

Mol’s board also authorized management to conclude an agreement with Croatia “that can lead to value creation through the execution of INA’s growth strategy,” Mol said in the statement.

Ability to Buy

Talks over how to run INA should continue as Croatia’s “bad” financial situation probably won’t allow the government to buy Mol’s stake, Economy Minister Ivan Vrdoljak said in a radio interview today.

Mol owns 49.1 percent of INA and has management rights in the company. Croatia’s government holds 44.84 percent.

Selling INA would be “the worst possible scenario” for Mol as the Croatian unit has been the group’s “growth story,” Akos Kuti, a Budapest-based analyst at broker Equilor Befektetesi Zrt., wrote in an e-mailed report today.

“It’s questionable what kind of acquisitions Mol would spend the cash on” if it sold INA, Kuti wrote. “Hence we’re expecting a decline in the stock in the short term,” he said.

Mol’s Chief Executive Officer Zsolt Hernadi is wanted by Interpol and sheltered by his home country after Croatia issued an arrest warrant as part of a bribery probe into the deal that gave Mol INA’s management rights in 2009. Mol denied any wrongdoing and said Oct. 3 that it would reconsider the “nature” of its involvement in INA.

To contact the reporter on this story: Andras Gergely in Budapest at

To contact the editor responsible for this story: Wojciech Moskwa at

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