State champion MVM moves in on more Hungarian energy assets

By bne IntelliNews March 6, 2014

bne -

MVM, the national energy champion being built up by Hungary, looked to secure another set of assets on March 5 as it signed preliminary documents on the acquisition of several subsidiaries of Germany's E.ON.

The non-binding letter of intent covers the possible acquisition of stakes in E.ON's Hungary's power and gas distribution companies, as well as its client service centre. MVM said it will proceed with due diligence, and plans to close the acquisition of all or part of the five units involved by the end of this year.

The deal is just the latest by MVM, which has been nominated to gather up energy assets by the Fidesz government as it pushes its way to state domination of the energy market. Budapest claims that its eventual aim is to make Hungarian utilities a non-profit sector.

"In line with the government's energy policy and the national energy strategy, MVM has taken important steps toward higher energy security in Hungary," MVM said in a statement.

In October, MVM bought E.ON's gas import, trade and storage business at a cost of HUF281.3bn (€909m), while it has also purchased gas storage units from MOL and the Fogaz distribution company from RWE in recent months.

While the government maintains that the purchases are part of a drive to reduce Hungary's dependence on Russian energy, some suggest it is rather that it wants to put itself in the middle of the trade. Recent deals with Moscow on the South Stream gas pipeline and the Paks nuclear plant appear to actually increase Hungary's energy independence on Russia.

Meanwhile, German utilities are happy enough to sell off assets in smaller markets such as Hungary. While Berlin's energy policy has hit their utilities hard on top of the crisis, E.ON and RWE have both been on a disposal drive. However, Hungary is pushing hard to drop the valuations of local utilities before it buys, having implemented a 20% cut to regulated prices over the past 12 months or so, with another round on the way.

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