Polish refiner PKN seeks full control of Czech unit Unipetrol
PRAGUE/WARSAW (Reuters) — Poland's biggest oil refiner PKN Orlen kicked off a voluntary tender offer to buy the remaining shares in Czech downstream oil group Unipetrol to take full control and delist it from the Prague bourse.
The Polish group said in a statement on Wednesday it would offer 380 crowns per share for Unipetrol, in which it holds 62.9%, a premium to Tuesday's close and near record levels seen in the past month.
Unipetrol has been on an upswing in the past few years thanks to rising refining and petrochemical margins that have boosted profits to the highest levels since PKN Orlen acquired the company in 2005, leading to the renewal of dividend payouts.
But PKN Orlen has had frosty relations with Unipetrol's minority shareholders who have challenged decisions and sought bigger dividends because the company is debt-free.
PKN said the current ownership structure prevented it from "reaping the full benefits" of its strategy initiatives.
"We believe... the answer from minority shareholders will be positive for this tender and we have a chance to deliver positive value for shareholders in PKN Orlen," Miroslaw Kochalski, deputy head at PKN Orlen, told a conference call.
The offer valued Unipetrol at 68.9 B crowns ($3.2 B), and its shares jumped 3.6% to 378 crowns in early trade. They hit a record 389 crowns in November.
Unipetrol reported earnings before interest, tax, depreciation and amortization (EBITDA) of 11.9 B crowns in 2016, a bumper year, and is close to completing an 8.5 B crown investment in a new polyethylene unit (PE3) that analysts see boosting core profit by 1 B crowns a year.
Shareholders, however, also challenged Unipetrol's decision last year to buy Czech chemicals firm Spolana from PKN Orlen because of concerns over investment costs.
ANALYZING OFFER
Paulinino Limited, part of Czech-Slovak investment group J&T and Unipetrol's biggest minority shareholder with 20%, said it was too early to comment on PKN Orlen's offer.
"We need to analyze all the details of the offer thoroughly," its representative, Pavel Muchna, said by email.
Analysts at Komercni Banka said the price was low given the earnings outlook. However, Kamil Kliszcz, head of equity research at DM mBank in Warsaw, said PKN was buying almost at the peak of the oil refining cycle, leaving margins vulnerable to downside. "The timing of the offer is not the best," he said.
PKN Orlen said the deal, running Dec. 28 to Jan. 30, was conditional on acquiring at least 90%, the legal threshold allowing a forced buyout of remaining shares. To secure that amount will cost PKN Orlen 3.05 B, and up to 4.2 B zlotys ($1.2 B) for full control.
It said the deal would not affect its other acquisition plans and dividend. It added it would finance it with its own funds and a syndicated loan available to the company.
PKN Orlen's cash reserve stood at 6.5 B zlotys at the end of the third quarter. Poland's treasury holds a 27.5% share in PKN Orlen, making it the biggest shareholder.
Reporting by Jason Hovet and Agnieszka Barteczko; Additional reporting by Petra Vodstrcilova; Editing by Edmund Blair and Susan Fenton
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