PKN ORLEN intends to take full control of Czech-based Unipetrol

PKN ORLEN, holding a 62.9% equity interest in Unipetrol a.s., has launched a conditional voluntary tender offer for shares in the Czech company. The offer is conditional on PKN ORLEN acquiring at least 90% of Unipetrol’s share capital.

Ultimately, PKN ORLEN aims to buy all Unipetrol shares and have the company delisted from the Prague Stock Exchange. The transaction is in line with the Group’s strategy for 2017–2021, which envisages integration of refining assets, extension of the petrochemical value chain, and development of the retail network.

Unipetrol a.s. is the largest refining and petrochemical group in the Czech Republic. It owns the refineries in Litvínov and Kralupy, the largest local retail chain Benzina (400 service stations), and Spolana, the sole PVC and caprolactam manufacturer on the Czech market. The company’s core asset is its Litvínov petrochemical operations – now the construction site for a polyethylene unit, the country’s largest petrochemical project to date.

The current ownership structure prevents PKN ORLEN from reaping the full benefits of the initiatives we have put in motion in the Czech Republic, including our efforts to improve the refining and sales efficiency and our investments in the petrochemical assets. Also, minority shareholders have expressed different expectations regarding the dividend policy. Once we acquire full control of Unipetrol, we will be able to better leverage the synergies from our optimisation measures and the enhanced segment management - said Wojciech Jasiński, CEO and President of the PKN ORLEN Management Board and Chairman of the Unipetrol Supervisory Board.

Tenders in the offer announced by PKN ORLEN will be accepted from December 28th 2017 to January 30th 2018, and the transaction is scheduled to be settled on February 23rd 2018. PKN ORLEN is offering CZK 380 per share, which is close to the price at which Unipetrol shares are currently trading on the Prague Stock Exchange. This means that acquiring a 90% and 100% equity interest would cost PLN 3.05bn and PLN 4.2bn, respectively.

The price in the tender offer was set on the basis of a valuation prepared by a reputable advisory firm engaged by PKN ORLEN, and was additionally reviewed and approved by an independent investment bank. The terms of the transaction do not differ from market valuations of companies with a similar business profile.

The transaction will be financed with PKN ORLEN’s own funds and with a syndicated loan facility available to the company. After the buyout is completed, the Group’s net debt will remain at a safe level, with no adverse effect to its credit rating.

“In our strategy, we have allocated to investments PLN 5.4bn on average in each of 2017 and 2018. Taking full control of Unipetrol will not affect our other acquisition plans, nor will it result in any revision to our dividend policy,” assures Wojciech Jasiński, PKN ORLEN’s CEO.

PKN ORLEN is a leading-edge player on the fuels and energy markets, and the largest company in Central and Eastern Europe, listed in the prestigious global rankings (such as Platts TOP250 and ThompsonReuters TOP100). In 2016, the ORLEN Group posted nearly PLN 80bn in revenue and a record-high LIFO-based EBITDA of PLN 9.4bn. The Group owns state-of-the-art integrated infrastructure with an annual processing capacity of over 30 million tonnes of various types of crude oil, and markets its products through the region's largest network of over 2,700 modern service stations. It invests in power generation assets in Poland – this year the potential of its newly built CCGT units will reach 1.1 GWe. The Group also has its own oil and gas assets in Poland and Canada.
ORLEN has long occupied the top spot among Poland's most valuable brands, with its value estimated at PLN 3.9bn. This year PKN ORLEN has also received − for the fourth consecutive time and as the only company in the region − the coveted title of The Most Ethical Company from the US-based Ethisphere Institute. For many years, ORLEN has remained a business champion and industry leader in Poland and in Central Europe.