Romania blocks Hungarian energy giant over Russian ties: Billion-euro deal at risk
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Hungarian state-owned energy company MVM Group has hit a major obstacle in its plan to expand into Romania. Last December, the company announced plans to acquire a majority stake in E.ON Energie Romania, one of the country’s largest gas and electricity providers, serving nearly 3.4 million customers. But the deal now appears increasingly unlikely to go through.
National security concerns raised
According to the Romanian Prime Minister’s office, the Committee for the Examination of Direct Foreign Investments (CEISD) has recommended the deal be rejected by the Supreme Council of National Defense (CSAT), Agerpres reported. The committee began its review in February, focusing on the transaction’s potential impact on Romania’s critical infrastructure and energy security.
The primary concern centers around MVM’s extensive reliance on Russian energy giant Gazprom through long-term gas contracts. Romanian authorities fear that MVM’s market entry could increase Moscow’s influence over the country’s energy sector. According to the Frankfurter Allgemeine Zeitung, Romanian officials are also wary that MVM might later transfer its acquired stake to a third party outside the European Union.
EUR 200 million bid may be overvalued
MVM is reportedly offering EUR 200 million for the acquisition, but former Romanian Energy Minister Sebastian Ioan Burduja claims the asset package may be worth no more than EUR 50 million. This valuation gap has further fueled the country’s scepticism over the proposed buyout.
The fact that MVM was willing to pay 400% of the estimated value of E.ON Energie Romania points towards interests being involved that are beyond mere business. That would appear to be Russian money through a Hungarian proxy being used to gain energy control inside Romania and thus the ability to exert influence on the Romanian government at a future point. The Romanians were quite smart to block that deal The Spanish blocked a Hungarian company again acting as a Russian proxy from buying a specialized train maker who is the only one with technology which enables trains to switch between different gauge tracks. That technology would be necessary for rail service switching between Ukrainian wide gauage tracks to standard gauge. Fidesz works for Russia.