WOOD Flash – MOL: Entering the Polish Market
MOL has announced that it has agreed to buy a retail network from Grupa Lotos in Poland, which consists of 417 sites. Lotos is selling the stations as demanded by the EU competition authority as a prerequisite for its merger with PKN Orlen. In a linked deal MOL is selling 185 stations in Hungary and Slovakia to PKN Orlen. With this transaction, MOL gains entry into a big retail market, at a critical scale, offering longer-term growth potential. Growth in the highly-successful consumer services segment has slowed in the past couple of years, and we see the entry into the Polish market as a good way to reignite growth. MOL has a well-integrated model, in which 45% of downstream sales are to its own businesses, including the retail sites. Following the deal, this proportion increases closer to 50%, improving resilience. We believe the transactions are at fair market value. Lotos’ retail business has generated about USD 60m p.a., on average, over the past few years, but we would expect this to increase post deal.Grupa Lotos is an oil concern which deals with oil extraction and processing and trading of high quality oil products. Co. supplies the market with, unleaded petrol, diesel oil, fuel oil, aviation fuel, industrial oil, asphalt and paraffin, among other things. Co. is engaged in the production and sales of engine oils and bitumen in Poland. Co. maintains oil exploration and production activities in the Baltic, North Sea and Norwegian Sea and operates three refineries in Gdansk, Jaslo and Czechowice, Poland. Co. markets its products in wholesale markets, as well as in retail markets through a network of petrol stations.
Polski Koncern Naftowy Orlen's activities are divided into three main business segments: the Refining Segment that comprises crude oil processing as well as wholesale and retail trade in refinery products. The Petrochemical Segment that encompasses production and sale of petrochemicals and chemicals. The Retail Segment that comprises of sales at petrol stations. Co.'s basic products include gasolines, diesel oils, light heating oil, Jet fuel, liquid gas, polyetylene, polypropylene, benzene, butadiene, acetone, phenol, glycols, toluen, ortoxylene.
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