UPDATE 2-CEZ says to take stake in Hungary's MOL

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By Peter Laca

KRYNICA, Poland, Sept 6 (Reuters) - Czech electricity producer CEZ will take a minority stake in Hungary's oil and gas firm MOL , CEZ Chief Executive Martin Roman told Reuters on Thursday.

CEZ, the largest central European company with a market capitalisation of $31.4 billion, and MOL announced last week they would form an alliance to build power plants in central and southeastern Europe.

CEZ said in a statement when the deal was first announced that it was "considering" taking a stake of upto 10 percent. The shares would come directly from MOL, a company worth $15.4 billion.

"It is a complicated structure. The exact size of the stake will be published when the contract is signed, which should be within a few months," Roman said on the sidelines of a business conference in the southern Polish town of Krynica.

"The main aim of the deal is construction of new sources (capacities)," Roman said. "The capital entry is related to the fact that when we are going to invest with a partner, we want to have some influence."

Analysts praised the plans to jointly build power stations but some questioned the rationale of taking an equity stake in MOL, saying it may have been influenced by politicians wanting to create a strong central European power group.

The alliance was established with a nod from key Czech government figures, a government source has said. The government owns a 67.4 percent stake in CEZ.

CEZ would help MOL in its struggle to defeat what MOL calls a hostile approach by Austrian refiner OMV , which has built up a 18.6 percent stake in the Hungarian firm.

MOL has so far defended itself from OMV by buying back its shares and parking them with friendly institutions. Directly and indirectly MOL controls roughly 40 percent of its stock.

But Hungary also proposed legislation late last month aimed at making hostile takeovers in the energy sector more difficult, though it said the law was not designed specifically to defend MOL.

OMV said on Thursday it was still interested.

"I said we are interested in consolidation ... so yes, we are interested in MOL," OMV Chief Executive Wolfgang Ruttenstorfer told Reuters on the sidelines of an international oil conference in Bucharest.

CEZ SEES VALUE

CEZ has said the first intended step of the partnership with MOL was building power plants at MOL's refineries in Hungary and Slovakia.

"We are strong in Czech republic, Poland, Bulgaria, Romania and Bosnia, they are strong in Hungary, Slovakia and Croatia, so there is a great territorial match," said Roman.

"Furthermore, a major part of production in the future will come from gas. They are strong in gas, we are not. We are strong in electricity, they are not, so it is a logical synergy."

CEZ shares gained half a percent in late trading to close 0.74 percent up at 1,082 crowns. MOL lost 0.17 percent to 26,255.

(Additional reporting by Luiza Ilie in Bucharest)

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Keywords: CEZ MOL/