Bloomberg News

Austria Passes Law to Protect Companies From Foreign Ownership

November 18, 2011

Nov. 18 (Bloomberg) -- Austria has amended a law to allow it to limit ownership of infrastructure companies by non- Europeans, in a move that may protect Telekom Austria AG from a potential takeover by Egyptian billionaire Naguib Sawiris.

A new clause in the country’s Foreign Trade Act states that stakes of 25 percent or more require approval by the Ministry of Economics unless the investor is from the European Union, the European Economic Area or Switzerland, according to legislation approved by parliament on Nov. 15.

The law, which applies to telecommunications companies, utilities, hospitals, fire brigades and disaster control organizations, defense and security companies, railways, and universities, stipulates that in case of an “endangerment of the interests of public safety and order,” takeovers can be held up or conditions imposed.

The change to the law could stop Sawiris from buying a “substantial” stake in Telekom Austria and may also hinder International Petroleum Investment Co. of Abu Dhabi from increasing its 24.9 percent holding in oil company OMV AG, Salzburger Nachrichten reported today.

“There is nothing that triggered this law,” said Waltraud Kaserer, a spokeswoman for the Ministry of Economics. “We’ve been planning to introduce it for a while.”

Options

Telekom Austria investor Ronny Pecik said on Oct. 28 that he teamed up with Sawiris to buy shares in Austria’s biggest phone company. The Alpine republic’s former phone monopoly said last month that a fund owned by Pecik acquired options to buy 5.4 percent of the company’s rights.

Marathon Zwei Beteiligungs GmbH, a subsidiary of Pecik’s RPR Privatstiftung investment unit, held the call options as of Oct. 14 and can exercise them any time until June 18. RPR and its units already own 374,721 shares, equivalent to 0.08 percent, bringing the investor’s total shareholding to almost 5.5 percent, according to a statement at the time.

Pecik and three other investors are targeting a 20 percent stake in Telekom Austria, Format magazine reported Sept. 9, without citing anyone.

Austria owns 28 percent of Telekom Austria and 31.5 percent of OMV.

--Editors: Jerrold Colten, David Risser

To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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