PKN ORLEN has signed a
memorandum of understanding with the Polish State Treasury and Grupa LOTOS
concerning its acquisition of Grupa LOTOS shares and thus control of the
Gdańsk-based group. It represents another stepping stone to establishing a
strong and integrated organisation capable of successfully competing on
international markets and significantly strengthening Poland’s security in
fuels and energy.
In the memorandum of
understanding, PKN ORLEN and the State Treasury confirmed their intention to
proceed with the transaction. At the same time, both parties declared further
cooperation and their will to continue negotiations to agree on the final scope
and structure of the transaction.
‘We are determined to
acquire Grupa LOTOS. This is our priority, and the memoranda of understanding
signed by all of the parties involved bring us closer to completing the
transaction in a smooth manner. Establishment of a single strong group,
comprising not only LOTOS but also Energa and PGNiG, is necessary considering
the future of their business and shareholder value creation. The acquisition
will also benefit Poland’s economy as the integrated group will have a greater
capacity to grow through investment and a stronger negotiating position. A
robust multi-utility group will strengthen energy security of Poland. The
region of Pomerania and its residents will be among the key beneficiaries of
the transaction, as we will be better placed to engage in initiatives spanning
social outreach, culture and sports across the region,’ said Daniel Obajtek,
President of the PKN ORLEN Management Board.
In the memorandum of
understanding, the parties confirmed that the transaction would be conditional
upon the implementation of remedies negotiated with the European Commission.
Therefore, PKN ORLEN and Grupa LOTOS declared their readiness to work together
towards this end. The companies also agreed to cooperate with the State
Treasury to support it in analysing the scope of the remedies and defining the
scope and structure of the transaction.
and Grupa LOTOS will, to the extent permitted by applicable laws, take the
necessary organisational measures and cooperate to implement the remedies, in
particular to make it possible for PKN ORLEN to specify how the remedies are to
be implemented and to manage their implementation on an ongoing basis based on
mechanisms agreed between the two companies.
objective of the transaction is to build a strong multi-utility group,
resilient to the changing macroeconomic environment and capable of completing
vital growth projects, including ones consistent with the energy transition
objectives. The remedies agreed on with the European Commission are optimal and
based on analyses of the transaction’s viability and energy security. They will
facilitate smooth execution of the transaction to the benefit of all the
parties involved, and thus further and consistent transformation of the company
into a multi-utility group.
The remedies include
commitments of PKN ORLEN and Grupa LOTOS with respect to fuel production and
wholesale, fuel logistics, retail, aviation fuel and bitumen. The decisions on
how the specific conditions are to be fulfilled and on other transaction
details will be agreed with potential external partners in the course of
separate discussions and negotiations.
The acquisition of Grupa LOTOS by PKN
ORLEN was initiated in February 2018 by signing a Letter of Intent with the Polish
State Treasury, which holds 53.19% of voting rights at the General Meeting of
Grupa LOTOS. In November 2018, a draft application for approval of the
concentration was submitted by PKN ORLEN to the European Commission. While
working on the document, PKN ORLEN and Grupa LOTOS received hundreds of
enquiries from the European Commission, to which they promptly replied.
Effective cooperation between all the parties led to the successful drafting of
a final application, which was submitted to the Commission in early July 2019.
At the end of August 2019, an agreement was signed between PKN ORLEN, the
Polish State Treasury and Grupa LOTOS to define a framework structure for the
proposed transaction. In late September 2019, as a matter of customary
practice, the Commission issued a standard ‘stop the clock’ decision for the
second phase of the merger negotiations, which was stopped in early March 2020.
On April 8th 2020, the Commission provided PKN ORLEN with an opportunity to
review the findings of the analyses it had carried out as part of the second
phase of the procedure. In line with the practice established for that phase,
the ‘Statement of Objections’ procedure was used. At the end of April 2020, PKN
ORLEN submitted a formal proposal of remedies; in early May, a market test
began, and on July 14th 2020 the European Commission conditionally cleared the
acquisition of Grupa LOTOS by PKN ORLEN.