PKN ORLEN set to acquire all shares in Energa Group

​A tender offer has been announced by PKN ORLEN to buy a minority interest in the Energa Group to facilitate further effective integration of the ORLEN Group’s and Energa Group’s assets. The buyout would also bring tangible benefits to the ORLEN Group’s shareholders and investors, who would be able to fully benefit from synergies generated by the merger.

‘We are building a strong multi-utility group capable of meeting the challenges of Poland’s energy transition. Effective integration within the Group is key to the process, therefore we said we want to acquire the full stake in the Energa Group from the very beginning. Acquiring full control of Energa would bring measurable organisational and operational benefits. This tender offer is also our response to the expectations expressed by those of our shareholders who did not take part in the first tender offer. Their interest in the offer best demonstrates our proposed terms were and still are optimal and attractive,’ said Daniel Obajtek, President of the PKN ORLEN Management Board.

The tender offer for 20% of the Energa Group shares will open on October 9th and end on November 20th. The price of PLN 8.35 per share is the same as in the first tender offer. Also, PKN ORLEN will seek to delist Energa shares from the Warsaw Stock Exchange, therefore a request to convene a general meeting of the company has been made. These efforts are aimed at fully leveraging the potential of Energa as a member of the ORLEN Group.

In April 2020, PKN ORLEN acquired an 80% interest in the Energa Group (conferring approximately 85% of total voting rights at its general meeting) in what was the largest transaction of its kind on Poland’s fuels and energy market. The acquisition process took only four months to complete. Shares were tendered for sale at the offered price of PLN 8.35 per share by investors holding a total of 80% or so of the company’s share capital, including the Polish State Treasury (with a 53% equity interest) and other shareholders including a large group of institutional investors (with combined interests of 27%).

The Energa acquisition marks another milestone in the process of building a multi-utility group by PKN ORLEN, which 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 acroeconomic volatility, creating added value for both customers and shareholders.

The Energa Group owns 54 RES generation assets, mainly across the hydro, onshore wind and solar PV segments, accounting for 39% of its power plants’ installed electricity generation capacity. As much as 47% of its electricity output in the second quarter of 2020 came from renewable sources. For PKN ORLEN, they represent a compelling asset portfolio that balances its conventional energy assets, including the CCGT units in Płock and Włocławek, and fits into PKN ORLEN’s plan of shifting towards zero- and low-emission energy sources. With this plan in mind, in April 2020 PKN ORLEN announced its intent to participate in the project to build a power plant in Ostrołęka but on condition that the technology is changed from coal to gas. In an agreement signed in May 2020 PKN ORLEN declared its intent to participate in the financing of the project and join it as a partner. This move was well received by the market.

The Energa Group’s assets play a major role in supporting PKN ORLEN’s strategy for achieving carbon neutrality by 2050. In furtherance of this goal, the Company aims to reduce carbon emissions from its existing refinery and petrochemical assets by 20% and reduce carbon emissions per megawatt-hour of electricity by 33% by 2030​.

PKN ORLEN announced a tender offer 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 it was extended until April 22nd 2020 due to the coronavirus pandemic and other factors. 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 of the shares covered by the tender offer, was satisfied on April 20th 2020. 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.