Daniel Obajtek, president of the management board of Polish state-owned oil refiner and retailer PKN Orlen SA, has signed a letter of intent to initiate the process of acquiring control of integrated oil company Grupa LOTOS Spólka Akcyjna.
Orlen said in a brief regulatory statement that it wants to acquire the government's 53% stake in LOTOS, which is valued at 5.8 billion Polish zlotys. The two companies have a combined market value of $15.6 billion, according to Bloomberg News.
The companies did not specify how they intend to proceed with the merger. If Orlen opts for a stock-for-stock transaction, 80% of its shareholders would need to back a possible share issue, which may face opposition from minority owners. In the case of a cash deal, Orlen would not only have to buy the state's 53% stake but would also have to make an offer for as much as 66% in LOTOS as required under Polish law, Bloomberg News said.
Orlen also said the acquisition is contingent on changes to a Polish law that bars the State Treasury from selling shares of state-controlled companies.
The deal would also draw scrutiny from European antitrust regulators, Bloomberg News noted.
As of March 1, US$1 was equivalent to 3.43 Polish zlotys.
