The European Commission has given the all clear for Polish state-owned oil refiner and petrol retailer PKN Orlen to take a majority stake in fellow Polish refiner and retailer Lotos Group.
The decision follows an in-depth investigation by the Commission of the merger, which was first agreed in 2018. Both oil companies are active in Poland, where they both own refineries, and also have activities in several other Central and Eastern European and Baltic countries.
However, the Commission’s approval comes with a number of conditions.
PKN Orlen will need to sell a 30 per cent stake in the Lotos refinery, nine fuel storage depots, 389 retail stations in Poland, a 50 per cent stake Lotos has in a jet fuel marketing joint venture with BP, and two bitumen production plants in Poland, the Commission said.
PKN Orlen has long believed that the merger would open up greater investment opportunities in asset development, foreign expansion and other areas, significantly strengthening the Polish economy.
“This merger is a chance for both companies to enter new areas of activity and develop even faster in those in which they are already active,” said PKN Orlen in a statement, while Jacek Sasin, Poland’s minister for state assets, said: “The Orlen Group will now be able expand on new markets and compete with the largest oil companies. We are building a powerful global multi-energy group in Poland.”
Orlen operates over 2,600 petrol stations in Poland and across Central and Eastern Europe, Lotos just under 500 – all in Poland. It is likely however that Lotos will remain a separate brand on the market. Last year, Orlen opened its first gas stations in Slovakia under the Benzina brand, part of the Unipetrol Group owned by its Czech subsidiary.
“Access to fuels at competitive prices is important for businesses and consumers alike,” said European Commission Executive Vice President Margrethe Vestager when announcing the decision. “We can approve the proposed acquisition of Lotos by PKN Orlen because the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive and that the merger will not lead to higher prices or less choice for fuels and related products for businesses and consumers in Poland and Czechia.”
PKN Orlen also today signed a letter of intent to begin the takeover of Poland’s largest oil and gas company, state-owned PGNiG.
PKN Orlen’s CEO, Daniel Obajtek, said: “The merger of these leading Polish companies will create an entity with diversified revenues, with a large raw material base, modern processing, and clean energy. We will be able to invest in large projects related to energy transformation.”
“We are taking historical steps towards creating an entity that will give the Polish economy a development impulse,” added Mr Sasin.
Since coming to power in 2015, Poland’s conservative Law and Justice party (PiS) has sought to increase state control over the economy, while reducing the role of foreign investors.
Earlier this year, PKN Orlen also acquired electricity distributor Energa.
Polish Prime Minister Mateusz Morawiecki said that the combined energy group – incorporating PKN Orlen, Lotos, Energa and PGNiG – could generate earnings before interest, taxes, depreciation and amortisation (EBITDA) of as much as 20 billion zlotys (4.46 billion euros).
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