UPDATE 1-CEZ forges alliance with MOL, may take stake

...

BUDAPEST/Czech power utility CEZ and Hungary's oil and gas group MOL will form a strategic alliance under which CEZ may buy a stake of up to 10 percent in MOL, the companies said.

Under a memorandum of understanding signed on Thursday, they will jointly build and operate heat and power plants fired primarily by gas, MOL said.

"Within the scope of this cooperation CEZ will also purchase from MOL an equity stake in MOL of up to 10 percent in the near future, and the parties will enter into related financial transactions. Any cross-shareholding in respect of the parties is not considered for the time being," MOL said.

CEZ said separately it was "considering" buying up to 10 percent of MOL.

MOL, with market capitalisation of $16 billion, has been fighting off what it called a hostile takeover attempt by Austrian refiner OMV , which has accumulated an 18.6 percent stake.

CEZ, central Europe's largest electricity company with market capitalisation of $31 billion, has been pursuing expansion across central and eastern Europe.

"Cooperation with MOL is an opportunity for CEZ to strengthen its position on the electricity markets in central and eastern Europe, with the contribution of a strong, established partner with experience in the gas business," CEZ Chairman Martin Roman said in a statement.

The cooperation is expected to start with building power plants in MOL's refineries in Slovakia and Hungary.

The deal is expected to be finalised in two months.

[PRAGUE/Reuters/Finance.cz]