MOL continues PKN bid despite setback

In the wake of state agency Nafta’s decision to halt the sale of an 18% stake in Polski Koncern Naftowy Orlen (PKN Orlen) Friday, Hungarian MOL vows to press ahead with its bid for Poland’s biggest oil company.
By : Leo Broomfield and wire reports

   Hungarian oil conglomerate MOL confirmed that it would continue to bid for Poland’s largest oil company, Polski Koncern Naftowy Orlen (PKN Orlen), despite the blocking of the sale last Friday by the state agency in charge of oil sector privatization – two days before elections.

   “We still believe we have a favorable offer for PKN and we want a partnership of equals,” said Denis Mohorovic, MOL’s regional press officer, who added that he expected the new government to reopen the tender.

   The minority cabinet, set to lose parliamentary elections on Sept. 23, had been racing to seal the sale of 17.58% in the country’s top fuels group to either MOL or Austria’s OMV before the poll. But the indecision of its agency and surprise changes to its boards has delayed the transaction, sparking a bidding war between the two groups. The Democratic Left Alliance (SLD) party, certain to win the elections by a large margin, has called the disposal hasty and threatened to cancel any potential transaction.

   “After taking into account opinions of Nafta’s privatization adviser BNP Paribas and management, the supervisory board .… has decided not to clear the management’s motion … to sell 17.58% in PKN Orlen,” Nafta Polska agency said in a statement.

   Nafta, whose approval is crucial to forward the motion for a cabinet approval, did not give details.

   The outgoing government has unexpectedly held three meetings this week to discuss the privatization of PKN Orlen, the country’s second largest oil refiner Rafineria Gdańska and Central Europe’s largest insurer Powszechny Zakład Ubezpieczeń (PZU).

   Mohorovic said that MOL was also interested in taking a 75% stake in Rafineria Gdańska if talks with U.K.-based Rotch fall through.

   Government spokesman Krzysztof Luft told Reuters that lack of approval by Nafta stopped the cabinet from selling PKN.

   “Because the government needed further information on the sales of the three firms, and in the case of PKN Orlen also the opinion of (Nafta’s) supervisory board, the discussion will continue,” Luft said Friday.

   The sale of the three firms is key for the treasury to meet its ambitious privatization revenue target of zł. 18 billion ($4.28 billion) this year, but lengthy negotiations, government indecision and a slump on world markets make the plan unrealistic, analysts said.

   By last Wednesday Nafta Polska was holding parallel talks with MOL and OMV – which according to market sources bid around 80% above the current market price.

   Details of the bids have been kept under wraps but sources close to negotiations say both firms bid at least zł. 30 per PKN share, valuing the stake at a minimum of zł. 2.2 billion ($520 million).

   PKN shares were down 2.4% to zł. 16.30 on Friday.