Hungary’s state company MVM responded to rumours, saying it has not abandoned plans to take over E.ON’s Romanian subsidiary – but it only “temporarily withdrew from the FSR mechanism” because the approval of the investment by the Romanian authorities takes more than expected and the company needs to “balance its costs and resources,” according to Ziarul Financiar.
FSR is a disclosure mechanism set in place by the EU in 2023 to identify non-EU subsidies. Companies that are active in the EU (or plan to invest in the EU or participate in EU public tenders) and that have received “financial contributions” from non-EU countries need to put in place systems for gathering the information required for FSR purposes (Norton Rise Fulbright).
The impact on the approval procedures in Romania is unclear, as long as the national body that screens foreign investments issued a negative opinion pointing out, among others, to “incomplete declarations and the unclear origin of MVM’s funds for this acquisition.”
“Despite the greater than expected difficulties we are currently facing in Romania in relation to the FDI (foreign direct investment) approval for the envisaged transaction, we remain fully committed and are doing everything in our power to obtain the necessary approval and complete the transaction,” MVM said in a press release cited by Ziarul Financiar.
As of now, Romania’s Foreign Direct Investment Review Commission (CEISD) issued a negative opinion on the planned takeover and referred the case to the country’s defence council (CSAT).
While the FSR mechanism refers to the European Union’s Foreign Subsidy Regulations aimed at screening companies operating on the European market for possible non-EU subsidies, MVM does not explain the nature of the impact FSR would have on its operations.
“Given the need to balance our costs and resources and taking into account the current uncertainty regarding the timing and outcome of the FDI decision, MVM has decided to temporarily withdraw from the FSR process. We intend to resume the process as soon as there is greater clarity regarding a positive FDI outcome,” according to the MVM statement cited by Ziarul Financiar.
CEISD found that MVM Zrt. has extensive commercial relations with Gazprom and Rosatom, Russian companies under international sanctions, through which Hungary maintains a high dependence on Russian natural gas and nuclear technology.
Elements of “decisive influence, shadow control, influence by economic dependence and effective control” were identified, both within MVM Grup and the company through which the majority stake in E.ON Energie Romania is intended to be purchased, according to CEISD.
Incomplete declarations and the unclear origin of MVM’s funds for this acquisition were found by CEISD, raising suspicions regarding compliance with European legislation on the prevention of money laundering and competition rules. The proposed value of the transaction also needs to be analysed, the Romanian body requested.
iulian@romania-insider.com
(Photo source: Mvm.hu)
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