Lex MOL bill passed

The Parliament approved "lex MOL" on Monday October 8. The law will come into force sometime next week. This law prevents foreign state-owned companies from taking over strategic Hungarian firms. The Lex MOL law is one of the strictest regulations in Europe, which could generously decrease the interest for Hungarian equities from international strategic investors. State-owned Austrian energy firm OMV's attempt to launch a hostile takeover of its Hungarian peer sparked the drive for the new legislation.
I believe that the Budapest Stock Exchange will under perform other regional markets as MOL, the largest oil and gas company will stay under selling pressure. This new law could also affect somewhat stocks like Richter (pharmateutical) and Magyar Telekom (subsidiary of Deutsche Telekom) as investors realize that those companies will not be subject to any hostile take-over attempt, reducing in that way its attractiveness as shareholders will not be compensated when selling their stake to a potential buyer. Analysts predict that in the case of the largest retail bank, OTP, it will not affect as much as already a hostile takeover for the bank was nearly impossible since its management has a strong control over the company already.
Furthermore, the Hungarian market has been underperforming in the past period, which could be related to preparing to "lex MOL.”
If the European Commission takes steps against the law, it could take years until any official decision is made by the European Court.
Last week, Internal Market Commissioner Charlie McCreevy wrote to Hungarian Economy Minister Janos Koka warning that he would push through a case against Hungary in the European Court of Justice if “Lex-MOL” was passed.
Koka, however, insisted the new law did not break European Union rules.
``It's not about protection against foreign investors,'' he told the Financial Times. ``It's about protection against illegal hostile demands.''
Vienna based OMV has for months pushed MOL to sit down at the negotiating table and last week offered 32,000 Hungarian forints per share, thus valuing the company at around 20 billion dollars. OMV asked MOL to unwind the shareholding structures that have given the management control of about 40 per cent of equity and to lift the 10 per cent voting limit on shareholdings. MOL’s management rejected the bid and conditions from OMV. Changing the rules would require 75 per cent of votes at an extraordinary general meeting, but the MOL board is now thought to have gained a voting influence of over 40 per cent by lending shares to banks with close links to the energy firm's management.
Several of MOL's independent shareholders (London based Centaurus Capital hedge fund and Templeton Asset Management) have come out in favor of talks with OMV, but so far MOL’s board has refused to change their ideas with respect to any possible synergy with its Austrian rival.