GDANSK/WARSAW -Poland’s biggest oil refiner PKN Orlen and number two player Grupa Lotos said on Thursday their management boards had approved plans for a merger first announced in 2018 but delayed by antitrust issues.
Both refiners are state controlled and the merger is part of a wider plan by Poland’s ruling Law and Justice (PiS) party to increase control over the economy and build big national companies to better compete with global players.
Shareholders of Lotos will get 1.075 shares of PKN for each Lotos share, the companies said.
For the merger to take effect shareholders of both groups must approve the share exchange. Shareholders owning at least 80% of Lotos shares have to back the merger terms to approve it.
Poland’s State Treasury controls 53.2% of Lotos and 27.5% of Orlen. It plans to end up with a 35.7% stake after the merger, PKN said in a presentation.
General shareholders meetings are expected to be held in July, while the merger should be registered and finalised in August.
PKN Orlen had announced plans to buy Lotos in 2018, but had to meet conditions set by the European Commission. In January, PKN said it would sell some Lotos assets to companies including Saudi Aramco and Hungary’s MOL to fulfill EU antitrust rulings and complete its takeover.
Critics, including Poland’s several former economy ministers, said selling Lotos’s assets, including a stake in the Gdansk refinery and a large chunk of its retail network to MOL, lacked transparency and could result in domination of Russian fuels on the local market.
These arguments gained traction after Russia invaded Ukraine and Hungary blocked European Union sanctions on Russian oil and refining products.
But Orlen and the government argue that the merger will improve company’s market position, its bargaining power and investment capacities.
Lotos shares gained 0.7% on Thursday to trade at 70.84 zlotys, while PKN’s shares lost 0.5% to 71.98 zlotys. The merger plan was announced after the market close.
($1 = 4.2598 zlotys)
(Reporting by Marek Strzelecki, Anna Koper, Adrianna Ebert and Anna Banacka; Editing by Kirsten Donovan and David Holmes)
