Orlen in Talks to Buy $7.8 Billion Polish State-Run Gas Firm

Poland’s biggest oil refiner signed a letter of intent with the government to acquire a controlling stake in the country’s biggest gas company as part of the state’s drive to create national champions.

State-run PKN Orlen SA will analyze the “optimal model” for the purchase of PGNiG SA, it said in a statement on Tuesday. The announcement comes on the day Orlen received the European Union’s conditional approval for its merger with smaller peer Grupa Lotos SA.

The proposed acquisition is part of the government’s push to create Polish national champions in the mold of South Korea or Japan, which will be able to compete abroad. Orlen’s aim is to become the biggest energy conglomerate in the country, spanning oil, gas as well as power production. This year, it bought utility Energa SA for $700 million.

“We have a plan of further integration by an enlarged Orlen so that Polish companies don’t compete against each other in foreign markets,” Prime Minister Mateusz Morawiecki said at Orlen’s news conference in Warsaw. “We can increase capacity and take advantage of synergies in retail.”

PGNiG jumped 4.6% to the highest level this year, boosting its market capitalization to 29.75 billion zloty ($7.5 billion). Orlen advanced 0.5% at 12:42 p.m. in Warsaw, taking its valuation to 26.35 billion zloty.

©2020 Bloomberg L.P.

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