PKN ORLEN closes the acquisition of the ENERGA Group

​PKN ORLEN has acquired an 80% interest in the ENERGA Group, conferring approximately 85% of total voting rights at its general meeting, in a transaction that has formally made PKN ORLEN the owner of the Gdańsk-based company. The acquisition was the largest transaction of its kind on the Polish fuels and energy market. It took only four months to complete. During that period, PKN ORLEN met all conditions precedent necessary to carry out the acquisition, including reaching the 66% threshold for shares subject to the tender offer. Their final price was set at PLN 8.35 per share.

‘Our priority right now is to successfully integrate the two companies. We have to thoroughly review the projects pursued by the ENERGA Group and to design actions that will be consistent with the strategy and corporate governance rules of both companies. The formal takeover of the ENERGA Group is a milestone on the way to building a strong energy conglomerate that will help to strengthen the competitive edge and financial position of the merged companies, Poland’s energy security and, first and foremost, Poland’s economy,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.

A tender offer was announced by PKN ORLEN to buy up all shares in the ENERGA Group on December 5th 2019. Originally, the tender offer period was to end on April 9th 2020, but on March 26th 2020 its was extended until April 22nd 2020 due to the coronavirus pandemic. The transaction was unconditionally approved by the European Commission on March 31st. On April 15th, the price in the tender offer was increased from PLN 7 to PLN 8.35 per share. On April 18th, PKN ORLEN and the State Treasury signed an agreement stating that the ENERGA Group’s strategic capex projects will be continued and an employment policy ensuring proper operation of the Group companies will be maintained. The last condition precedent, which was reaching the 66% threshold for shares subject to the tender offer, was met on April 20th. The transaction was formally closed on April 30th with the purchase of ENERGA shares representing approximately 80% of the company’s share capital and ca. 85% of total voting rights at its general meeting. The price for the shares totalled ca. PLN 2.77bn and was paid by PKN ORLEN from internally generated cash and a syndicated credit facility.

Becoming part of an integrated group is an immense growth opportunity for the ENERGA Group. Building energy conglomerates is in line with megatrends and efforts pursued by other international oil companies, as diversified revenue streams make a company more resilient to market fluctuations and macroeconomic volatility, creating added value for both customers and shareholders. An example of a state-controlled multisectoral business is ENI, now the largest Italian company and a leading integrated oil and gas producer in the world. Its Polish counterpart would be an integrated group comprising ORLEN, LOTOS and ENERGA.

The integrated corporate group will have an even greater investment capacity. As declared in the agreement with the State Treasury, PKN ORLEN will continue the ENERGA Group’s strategic projects, but will also review their terms and conditions. The ORLEN Group plans further expansion of its existing business lines, including electric mobility and renewable energy, but it is also poised to embark on new projects, such as offshore wind farms.

The transaction closing would help better leverage the potential of both companies. As for the ENERGA Group, it owns more than 50 RES generation assets, mainly across the hydro, onshore wind and solar PV segments. Renewable sources account for over 30% of the ENERGA Group’s electricity output – a share unmatched by any of its major competitors. For PKN ORLEN, they represent a compelling RES portfolio that balances its conventional energy assets, including the CCGT units in Płock and Włocławek.

The transaction will also enable the ENERGA Group to use PKN ORLEN’s current surplus output. This in turn will help reduce operating expenses related to electricity trading on the Polish Power Exchange. What is more, combining the customer bases of both groups wil increase their cross-selling potential (especially among retail customers).

PKN ORLEN’s acquisition of the ENERGA Group will benefit the companies involved as well as Poland’s economy, with Pomerania and its residents as the key beneficiaries of the acquisition. The capex projects in the pipeline will increase business volumes. The ENERGA Group will remain a separate entity for tax purposes and will continue to pay taxes locally, providing a source of even more tax revenue for the local government and improving growth prospects for the Pomerania region.​