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PKN ORLEN and Grupa LOTOS in final straight for merger

Poland’s energy companies PKN ORLEN and Grupa LOTOS have agreed and signed a merger plan involving the transfer of the LOTOS assets to PKN ORLEN. In exchange for shares held in Grupa LOTOS, its existing shareholders will receive shares in the enlarged PKN ORLEN.

Now, the transaction is subject to the approval of the share exchange ratio and other terms of the merger by shareholders of both companies at their respective general meetings. Once the process is carried through, it will lead to the creation of a strong multi-utility group pursuing capital projects aimed to strengthen Poland’s energy security and its independence in terms of feedstock supplies.

“Poland’s energy security as the driving force behind the country’s economic growth is for us a priority goal,” said Daniel Obajtek, President of the PKN ORLEN Management Board. “This is why we are setting out to build a strong integrated group with well-diversified revenue sources, resilient to the highly volatile macroeconomic environment. As was the case with our previous acquisitions, we intend to enhance the LOTOS post-merger value by leveraging the strengths of both combined entities. The strong partnership we have secured for the process, being a global petrochemical leader and the world’s largest oil producer, will provide added support. As a result, we will modernise and further develop our business, strengthening its resilience to the increasingly volatile market environment and driving sustainable value creation for our shareholders, retail customers and local communities.”

As a result of the merger between PKN ORLEN and Grupa LOTOS, the Polish State Treasury’s equity interest in the combined entity will increase to approximately 35 per cent. Assuming a subsequent merger with PGNiG, this stake will increase to about 50 per cent, meaning that the state’s control over the newly formed multi-utility group will be further reinforced.

The proposed acquisition is the simplest and quickest solution possible for this transaction, which will enable swift and complete integration of the assets and businesses. The adopted transaction structure will also ensure liquidity for the new group, enabling the effective continuation of the existing projects and investment in other promising business areas.

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