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PKN ORLEN a step closer to be the energy leader in CEE

Following the buy-up of the ENERGA Group shares and the European Commission’s conditional antitrust clearance of the acquisition of Lotos Group, PKN ORLEN and the State Treasury have signed a Letter of Intent concerning the acquisition of the PGNiG Group.

The planned transaction will be yet another milestone in Poland’s oil refiner and petrol retailer PKN ORLEN’s strategy to build a powerful multi-utility group. PKN ORLEN is at the helm of the process aimed at creating a single, all-Polish group with well-diversified revenue sources and significant market standing in Europe.
“The acquisitions will have paved the way for PKN ORLEN to become the key entity behind the process, which requires significant capital strength,” said Mateusz Morawiecki, the Prime Minister of Poland. “Such mergers open up opportunities to generate additional income and cost synergies. It will be a breakthrough process, set to enhance the operational efficiency of both PGNiG and PKN ORLEN. Overall, the integration of certain markets, spanning distribution, sales and trading, points to further directions of growth.”

Following the integration of PKN ORLEN, ENERGA Group, LOTOS and PGNiG assets, the total annual revenue of the new group would reach some 200 billion zloty (around 44.6 billion euros). The combined entity’s operating profit would continue to be driven in approximately 40 per cent by the core business activity, namely the refinery and petrochemical operations, while the upstream segment, with a total annual output of approximately 70 million barrels of oil equivalent (boe) of oil and gas, would account for about 20 per cent of the group’s EBIT figure.

“The Polish economy is receiving a powerful boost and there is more to come,” added  Jacek Sasin, Deputy Prime Minister, Minister of State Assets. “[…] With combined CAPEX budgets, such consolidated players will be able to turn bold and ambitious projects into reality. Poland’s energy transformation is a huge challenge and our role is to make sure it proceeds as efficiently as possible. Having all the capabilities necessary to carry out this process, PKN ORLEN will play the leading role in the planned transaction. We are a part of Europe, where many energy companies have already consolidated with the support of their countries’ governments. The creation of multi-utility groups to become major players in Europe and worldwide is also an element of our government’s economic policy.”

Daniel Obajtek, President of the PKN ORLEN Management Board, confirmed that the company is determined to build a strong multi-utility group, which will be more resilient to market volatility and able to face the challenges of a highly competitive market.

“This project is central to Poland’s economic future, given our need for energy transition,” he said. “If we want to count as a major player on the business map of Europe, we must see it through. The refining business is cyclical, driven largely by the highly volatile macroeconomic environment.”

Under the Letter of Intent, the transaction model and schedule will be determined by a team representing all its parties. PKN ORLEN’s role as the transaction leader will be central to that process. The value of PGNiG, including the State Treasury’s shareholding, will be determined ahead of the transaction. Necessary procedures before the competent competition authorities, which include the European Commission or the Polish Office of Competition and Consumer Protection (UOKiK), will also be carried out.

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