PKN ORLEN has started the most important stage of Grupa LOTOS acquisition

‘The proposed merger of ORLEN and LOTOS is vitally important both for the two oil companies and for the entire Polish economy. Therefore, the smooth acquisition of Grupa LOTOS is our priority. We are staying in touch with the Commission and there is a constructive atmosphere in our talks. We are taking every effort to proceed with the transaction as planned. As previously announced, we have already provided the Commission with key transaction documents. On their basis, we will together develop the final version of the request,which will precisely define the terms and conditions for closing the transaction. We are continuing the pre-notification process and are about to enter the critical phase of our negotiations with the Commission,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.

The draft request provides a detailed overview of the business activities of both companies relevant in terms of competition on the European markets. Preliminary proposals of remedial measures, due to high concentration in the business areas where the ORLEN and LOTOS Groups operate, have also been presented. The European Commission will commence formal proceedings in respect of the notified concentration once PKN ORLEN has submitted its final request, which will depend on the negotiations with the Commission. According to our schedule, we hope to secure the Commission’s clearance by mid 2019. 

The acquisition of Grupa LOTOS by PKN ORLEN was initiated in February 2018 by signing a Letter of Intent with the State Treasury, holding 53.19% of voting rights at the General Meeting of Grupa LOTOS. The letter outlined the transaction structure. In the first stage, PKN ORLEN would acquire 32.99% of Grupa LOTOS shares from the State Treasury. Next, a tender offer for shares representing up to 66% of total voting rights at the General Meeting of Grupa LOTOS would have to be announced.

Commercial, financial, legal and tax due diligence of Grupa LOTOS began in April 2018 and is now at an advanced stage.

The original intention is for the transaction to create a strong and integrated corporate group, better positioned to compete in international markets and resilient to market fluctuations. The ongoing process will benefit not only the two companies involved, but also the Polish economy as a whole. Synergies from the consolidation will enhance the potential of the merged group in many areas of business, which will enable its further significant expansion in Poland, in the region and globally. What is more, the merged group will enhance Poland’s energy security, especially in unfavourable market conditions. Joint procurement will help it reduce the prices of imported crude oil, but will also make it possible to diversify its supply sources geographically.

Consolidation of energy companies is not unheard of on the European market. On the contrary – such transactions have already been carried out in most countries across Europe. Examples include the MOL Group, established by consolidating nine Hungarian oil and gas companies. The same happened in the case of companies such as Statoil (Norway), Repsol (Spain), GalpEnergia (Portugal), ENI (Italy), OMV (Austria), and TOTAL (France).​