Krzysztof Tchórzewski, Poland’s Minister of Energy as the State Treasury’s representative, and Daniel Obajtek, President of the PKN ORLEN Management Board, have signed a letter of intent to begin the process of the acquisition of control of Grupa Lotos S.A. by PKN Orlen S.A.
By signing the letter of intent, PKN Orlen and the State Treasury agreed to commence negotiations to execute a transaction whereby PKN Orlen will acquire, directly or indirectly, at least a 53% interest in Grupa Lotos’s share capital. As part of the transaction, PKN Orlen is to purchase Grupa Lotos shares from its shareholders, including in particular from the State Treasury.
Mr 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.”
The parties to the letter of intent want the transaction to create a strong and integrated corporate group, which is better positioned to compete in international markets and resilient to market fluctuations, by exploiting operational and cost synergies between PKN Orlen and Grupa Lotos.
Mr 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. With this front of mind, we are determined to smoothly and effectively follow the process through to completion with the support from the State Treasury as the major shareholder, while respecting the rights of all shareholders and taking care of employees […] The letter of intent we have signed marks a transition from long years of planning and conceptual work to actual implementation. Due to formal reasons, including required approvals, the process will take about a year. We are committed to maintaining full transparency and we will keep all interested stakeholders informed about each next step.”
Read the article online at: https://www.hydrocarbonengineering.com/refining/28022018/pkn-orlen-and-grupa-lotos-to-merge/