PGNiG and PKN Orlen have agreed on a plan to merge the two companies and on the exchange ratio at which PGNiG shares will be swapped for PKN Orlen shares. In exchange for their holdings, PGNiG shareholders will receive new PKN Orlen shares at a ratio of 0.0925 to 1, meaning that for each PGNiG share shareholders will receive 0.0925 PKN Orlen share. The merger plan will be implemented once relevant decisions are passed at the general meetings of the two companies. The merger could close by end-2022.
PGNiG (71.9% state-owned) is active in production, import, storage, distribution and sale of gas. It is the largest gas wholesaler and retailer in Poland, accounting for 89% of domestic supply in 2021 and for 80% of the volumes sold on the wholesale market; it also controls the six main gas distribution companies in the country.
PKN Orlen (32.4% state-owned, Nationale Nederlanden 7%, Aviva Investors Poland 6.6%) is active in oil production, transportation (it operates 1,900 km of oil pipelines in Poland, including 930 km for crude oil and 960 km for oil products), refining (16 Mt/year Plock refinery), wholesale of oil products (12.8 Mt sold in Poland in 2021) and retail (1,840 service stations, i.e., 1/4 of the market in March 2022). PKN Orlen is also active in the electricity sector and is one of the largest gas consumers in Poland. In June 2022, PKN Orlen and its smaller rival Grupa Lotos (53.2% state-owned), which operates the 10.5 Mt/year Gdank refinery and owns a network of 700 services stations, agreed to merge. The transaction should be finalised in August 2022.
The Polish state is expected to increase its share in PKN’s capital to 52% following its mergers with Grupa Lotos and PGNiG. As the country intends to maintain the public nature of the company, the government would have to announce a public tender offer for all the remaining shares, or sell some shares, to fall below 50%.
In March 2022, the Polish Office of Competition and Consumer Protection (UOKiK), which implements antimonopoly regulations in the country, conditionally approved the merger between PGNiG and PKN Orlen. Most notably, PGNiG will have to relinquish control over its Polish gas storage unit, to ensure that competition in the Polish gas market is not restricted.