Poland’s largest refiner PKN Orlen said it will sell some Lotos assets to companies including Saudi Aramco and Hungary’s MOL to fulfil EU antitrust rulings and complete its takeover of the smaller firm.
PKN Orlen’s purchase of Lotos is part of a wider plan by Poland’s ruling Law and Justice (PiS) party to increase control over the economy and create ‘national champions’ able to compete with global players. Both companies are controlled by the state.
MOL will buy 417 fuel stations in Poland for $610 million, expanding its regional footprint in the largest economy in the European Union’s eastern wing.
Saudi Aramco will buy a 30% stake in Lotos Asfalt, one of the largest manufacturers of bitumen in Europe which also owns the Lotos oil refinery in Gdansk, in a deal including a fixed payment of 1.15 billion zlotys and variable elements. It will also acquire 100% stakes in two other units.
Orlen has also signed a deal with Aramco for oil supplies of 200,000-337,000 barrels per day, adding more purchases to those agreed earlier. Deliveries under the new contract will start this year, PKN’s chief executive told journalists.
Poland’s Unimot and Hungary’s Rossi Biofuel will also purchase some Lotos assets, PKN Orlen added.
Critics say selling Lotos’s assets would result in letting more international competitors into Poland, but Orlen and the government argue that taking over the smaller rival will improve company’s market position, its bargaining power and investment capacities.
“This new company…is a great opportunity for Poland…to successfully face the challenges we are facing today. The challenges related to the energy transformation, to global changes when it comes to new sources of energy and fuels,” Poland’s state assets minister told journalists.
“I am convinced that Orlen will be strengthened by these Lotos assets, but also strengthened by cooperation with Saudi Aramco,” Jacek Sasin added.
PKN Orlen announced plans to buy Lotos in 2018, but had to meet conditions set by the European Commission. It agreed to sell some Lotos assets to address competition concerns.
“The merger of PKN Orlen with Grupa Lotos is a great economic, political and social event in our part of Europe,” Polish president and PiS ally Andrzej Duda said on Twitter.
“Thanks to the contracts signed, the energy security of central Europe increases significantly,” Duda added.
The company is expanding beyond its core refining business, with plans to take over Polish gas giant PGNiG, a deal which is pending approval by Poland’s anti-monopoly watchdog.
It also bought local newspaper publisher Polska Press in a deal critics say was an attempt by PiS to expand control over the media. PKN Orlen said it was a simple business transaction.
“We have made several acquisitions, but we still have a lot of acquisitions ahead of us,” PKN Orlen chief executive Daniel Obajtek told a news conference.
Obajtek said the Lotos takeover might be completed in late June or early July.
Source: Reuters.com