09/24/2019 | Press release | Distributed by Public on 09/24/2019 03:57
As a matter of customary practice, the Commission has issued a standard 'stop the clock' decision for the second phase of its evaluation, so that PKN ORLEN has more time to gather additional information requested by the Commission. The 'stop the clock' procedure is now commonly used by the Commission for the purpose of in-depth investigations, especially into complex acquisitions, so that the Commission can take a well informed decision.
We were prepared for it and remain committed to ensuring that the LOTOS acquisition benefits the market as a whole. We stand by our arguments and will continue to cooperate with the Commission to get an authorisation as soon as possible said Daniel Obajtek, President of the PKN ORLEN Management Board.
The European Commission's decision was prompted solely by the need to collect additional information. It will temporarily slow the pace of the process, but the practice is a customary one and has been applied before for a number of proposed acquisitions, including EON/Innogy and Vodafone/Certain Liberty Global Assets, with conditional approvals issued by the Commission in both cases.
The aim of PKN ORLEN's acquisition of the LOTOS Group is to build a strong entity with international potential, which would be an important player on the oil supply market. This is particularly important for the fuel and energy security of supply for Poland, but also for Central and Eastern Europe, and thus for consumer protection as demonstrated by the recent crisis with contaminated Russian oil. The creation of such an entity would also increase its ability to finance large, multi-billion dollar projects, which would drive forward Poland's economy with added benefits for the environment, plans to construct offshore wind farms being a case in point. With the closing of PKN ORLEN's acquisition of the LOTOS Group, Poland would join the global trend towards building major players on the fuel and energy market. It would be a response of the Polish companies to global trends in the refining industry, which would reduce the risk of liquidity loss by the domestic refineries.
In this context, the new entity will also continue to support its local communities and once combined, would also be better placed to engage in initiatives spanning social outreach, culture and sports across the region. Its coordinated CSR policy would deliver stronger and more thorough support for local communities.
Importantly, the Gdańsk province would continue to receive income from CIT, PIT and property taxes. Benefits for LOTOS would include the ability to win new business and gain a foothold in new market segments, while developing its presence in those where it is already active, such as electric mobility and hydrocarbon exploration and production. The consolidation would involve business process optimisation, without reducing staff levels. No jobs would be made redundant - on the contrary, employees would be able to grow professionally, working for a larger and stronger organisation of international stature.
European and global players in the fuel and energy sector have long completed their own consolidation processes. Examples include MOL (Hungary), Statoil (Norway), Repsol (Spain), GalpEnergia (Portugal), ENI (Italy), OMV (Austria), and TOTAL (France).
None of the consolidation processes in Europe limited in any way the competition on the respective markets in terms of fuel sales or logistics. This would also be the case with PKN ORLEN's acquisition of the LOTOS Group, especially if the European Commission approves the remedial measures to be proposed.
The acquisition of the LOTOS Group by PKN ORLEN was initiated in February 2018 by signing a Letter of Intent with the Polish State Treasury, holding 53.19% of voting rights at the LOTOS general meeting. In April 2018, a due diligence process was commenced at the LOTOS Group to examine its commercial, financial, legal and tax positions ahead of the planned acquisition. In November 2018, a draft application for approval of the concentration was submitted by PKN ORLEN to the European Commission. While working on the document, PKN ORLEN and Grupa LOTOS received hundreds of enquiries from the European Commission, to which they promptly replied. Effective cooperation between all the parties involved had led to the successful drafting of a final application, which was submitted to the Commission in early July. Additionally, an agreement was signed at the end of July between PKN ORLEN, the PolishState Treasury and the LOTOS Group, defining the framework structure for the proposed acquisition of the Gdańsk-based company.