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PKN ORLEN closer to take over the ENERGA Group

The European Commission has given its unconditional approval for PKN ORLEN’s plan to take over the ENERGA Group. This is another step, following the tender offer, on PKN ORLEN’s path towards further diversification of its business and strengthening of its position on the competitive European market. The transaction aims to benefit both companies, the regions where they operate and their shareholders, as well as to make Poland’s economy more resilient to new challenges.
“We welcomed European Commission’s approval of our plan to purchase Energa shares. Today, we are one step closer to achieving our strategic goal of building a strong business capable of successfully competing in the international marketplace and resilient to macroeconomic volatility. This is particularly important in the challenging conditions we are facing these days due to the spread of the coronavirus epidemic. The merger between PKN ORLEN and ENERGA represents an opportunity to strengthen not only the two companies, but also Poland’s economy. Diversification of revenue sources will improve the operational stability and security of the entire Group. Consolidation of power sector and fuel and oil sector entities has become a driver of growth and competitiveness of national companies in Europe and worldwide,” said Daniel Obajtek, President of the PKN ORLEN Management Board.

The Commission’s unconditional consent to the transaction means that one of the conditions precedent in the process has been satisfied. Recently, due to the situation caused by the coronavirus epidemic, PKN ORLEN decided to extend until April 22nd 2020 the subscription period for ENERGA shares, which started on January 31st 2020. In the tender offer, PLN Orlen offered PLN 7 per ENERGA share. According to the terms of the tender offer, PKN ORLEN will purchase the shares tendered in response to the offer on condition that they carry in aggregate no less than 66% of total voting rights.
Becoming a part of an integrated corporate group is an excellent growth opportunity for the ENERGA Group. Establishing multi-utility businesses is in line with megatrends and efforts pursued by other international oil companies, as diversified revenue streams make a company more resilient to market fluctuations and macroeconomic volatility, creating added value for both customers and shareholders. Regional players competing with the ORLEN Group, such as MOL, OMV and Repsol, as well as international giants including BP, Shell and Total, have already taken this path of business expansion.

The transaction closing would help better leverage the potential of both companies. As for the ENERGA Group, it owns more than 50 RES generation assets, mainly across the hydro, onshore wind and solar PV segments. Renewable sources account for over 30% of ENERGA Group’s electricity output – a share unmatched by any of its major competitors. For PKN ORLEN, this is an interesting RES portfolio complementing its conventional assets such as CCGT units in PĹ‚ock and WĹ‚ocĹ‚awek. It also plays an important part given PKN ORLEN’s plans to invest in offshore wind projects.

The deal will also facilitate the utilisation of PKN ORLEN’s existing surplus output by the ENERGA Group. This in turn would help reduce operating expenses related to electricity trading on the Polish Power Exchange. What is more, combining the customer bases of both groups would increase the cross-selling potential (especially among smaller customers).
The purchase of ENERGA shares would also enhance growth prospects in the segment of electric mobility, where ORLEN has been consistently strengthening its foothold. If the deal is completed, it would expand ORLEN’s EV charging infrastructure and increase its capabilities necessary for growing that line of business. The combined networks of fast EV chargers of PKN ORLEN, the ENERGA Group and the LOTOS Group would make up the second largest infrastructure of this kind, with 133 charging points and good geographical coverage.

ORLEN’s acquisition of the ENERGA Group would also bring tangible benefits to the latter’s staff and local communities. Power industry experts working for ENERGA, who are in extremely short supply on the labour market, would be a valuable addition to the ORLEN Group’s team. In tax terms, the ENERGA Group would remain a fully separate entity, continuing to pay taxes locally where it operates.

The ENERGA Group’s sponsorship policy with its focus on support for local communities living in the Pomerania region will also remain unchanged. PKN ORLEN is already actively engaged in community support in the region, as best demonstrated by its organising the 2019 edition of VERVA Street Racing, Poland’s biggest motorsports event, in Gdynia.
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