WOOD Flash – PKN Orlen: announces deals to satisfy the EU remedies for the merger with Lotos
This morning, PKN Orlen announced details of the agreements it has made in order to meet the demands from the EU competition authorities for remedies to enable the merger with Grupa Lotos. A press conference was held to discuss the issues. The smaller assets have been sold to local and regional businesses, but the largest transactions involve Saudi Aramco (SA) and MOL. SA is to acquire both Lotos’ wholesale business and a 30% stake in the Gdansk refinery, for a total consideration of PLN 2.15bn. MOL is to buy 417 retail sites for USD 610m and sell 185 sites in Hungary and Slovakia to PKN Orlen for USD 259m. The total value of the three largest deals is therefore about USD 1.2bn. Pricing details on the other transactions have not been disclosed, but management stated that the total is about PLN 5. Details of how debt related to these assets would be shared have not been made public. The total transaction valuation is equal to 6.25x EBITDA for the assets being sold, which is actually higher than the current multiple for Grupa Lotos.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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