PKN Orlen to Acquire Controlling Stake in PGNiG
Polish state-controlled integrated energy company Polski Koncern Naftowy Orlen SA (PKN Orlen) has signed a non-binding Letter of Intent (LoI) with the country’s State Treasury to acquire its controlling stake in Polskie Górnictwo Naftowe i Gazownictwo SA (PGNiG). The Government of Poland currently owns a 71.88% stake in PGNiG. The financial terms of the transaction have not been disclosed.
PGNiG is an integrated oil & gas company involved in exploration & production, trading, storage, distribution, as well as heat and electricity generation operations. It currently has upstream operations in Poland, Norway, Denmark, Libya, Egypt, and Pakistan. Through various subsidiaries, PGNiG is also involved in providing specialist geophysical, drilling and well services.
PKN Orlen operates across the exploration & production, refining, marketing, petrochemicals, and power generation segments in Poland, Czech Republic, Germany, Lithuania, and Canada. The Polish State Treasury currently owns a 27.52% stake in the company.
Under the terms of the LoI, PKN Orlen will play the leading role in the capital and organisational consolidation of the companies. The first stage of the process will involve negotiations of the provisions of the LoI between the companies. The companies have also agreed to form teams for preparing a transaction structure and schedule.
PKN Orlen also announced that the European Commission has approved its acquisition of its smaller rival refiner, Grupa Lotos SA, on the condition that PKN Orlen sells several assets.
“We are building a powerful global multi-energy group in Poland. The consolidation of state-owned companies is our response to the increasingly demanding environment,” Jacek Sasin, Poland’s Deputy Prime Minister and Minister of State Assets said at a press conference.
“A larger PKN Orlen is a key company. Capital strength is needed to carry out this process. Through this type of merger it’s possible to generate revenue and cost synergies. This is a breakthrough process that will increase the efficiency of PGNiG and PKN Orlen,” said Mateusz Morawiecki, the country’s Prime Minister.
The transaction is subject to customary closing conditions, including obtaining necessary administrative and corporate approvals, and approval from the Polish competition and consumer protection authority.