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Polish oil refiner PKN Orlen intends to acquire majority stake in Grupa Lotos

PKBR Staff Writer Published 28 February 2018

Polish oil refiner and petrol retailer PKN Orlen has signed a letter of intent with Poland’s state treasury to acquire at least 53% stake in Grupa Lotos, which operates the Gdansk refinery in the country.

PKN Orlen, which is 27.5% state-owned, plans to acquire directly or indirectly, at least a 53% controlling stake in Grupa Lotos form the Polish government, for undisclosed amount.

The proposed acquisition is part of Poland’s government plan to combine two of its biggest refiners in order to create an integrated group with potential to compete in European markets.

PKN Orlen management board president Daniel Obajtek said: “The concept of merging PKN ORLEN and Grupa LOTOS has been spoken of for over a dozen years, but there has not been enough determination to achieve this objective, perhaps because an important business decision such as this was underpinned by emotions rather than hard facts and figures.

“Consolidation processes have been carried out on that market for many years, and to be competitive we have to make up for the lost time and be ready to embrace new challenges facing the petroleum sector. The consolidated company will be better positioned to compete on the open European market.

“The model of the proposed transaction, as well as its timeline and detailed terms, require thorough analysis and will now be worked out.”

PKN Orlen said that the integrated corporate group will be better positioned to compete in international markets. It will also exploit operational and cost synergies between PKN and Grupa Lotos.

PKN Orlen has major operations in Poland, Czech Republic, Germany, and the Baltic States.

The transaction, which is planned to be completed within a year, would be conducted through a public share tender or share swap, reported Reuters.

Obajtek added: “The business decision to build a strong, integrated fuel and petrochemical group is needed for multiple reasons: the future of the two companies’ business, creation of shareholder value, national energy security, and the interests of retail customers.”

The transaction is conditional upon securing relevant corporate approvals and concentration clearance from the anti-trust authorities, among others.

Image: PKN Orlen headquarters in Poland. Photo: courtesy of Adam Kliczek, http://zatrzymujeczas.pl (CC-BY-SA-3.0)/Wikipedia.