Austro-Hungarian oil major OMV has admitted that it is in discussions with the Austrian electricity distributor Verbund about a possible 'alliance' to create a central European energy player worth some E18 billion.
Potential synergies between their respective gas and power businesses is one area to be exploited, OMV said in a statement on the deal, although it gave few further details.
The decision to examine a possible merger may be driven by a desire to create a stronger player in central Europe, thereby warding off the threat of acquisition by a suitor from abroad, such as Russia’s Gazprom.
OMV has recently been expanding its footprint in eastern Europe with a series of acquisitions in that region, while western European firms such as Italy’s Enel have also made the area a key target for future expansion opportunities. Among the local energy majors, Czech group CEZ is perhaps the strongest, given its strength as a power generator, distributor and trader.
However some analysts have been quick to pour scorn on the idea of an OMV-Verbund merger, as the two firms are seen as too different, especially given OMV’s traditional focus on oil. One analyst told Dow Jones Newswires that there were ‘few synergies, only overheads’ under the proposed plans, suggesting that Verbund’s gas business was also too small to justify the deal.