Much ado about merging

Despite a series of statements by government officials in favor of the merger of Poland's two largest refiners, Lotos and PKN Orlen, the tie-up is still uncertain. No binding decision has yet been made on whether or how it will happen. The proposed fusion is seen as a preventive measure against a hostile takeover of Orlen by Russian oil companies and, until recently, the most probable scenario was the purchase of Lotos by Orlen.

Prime Minister Jarosław Kaczyński suggested in September, however, that the reverse would be a safer solution, with Orlen to be swallowed by Lotos. The reasoning behind the proposal was that the state has a bigger stake in Lotos - around 60 percent - than in Orlen, where its stake is limited to around 50 percent. Although some experts agree with the idea, others consider the proposal unusual since Lotos is several times smaller than Orlen.

"The idea has been analyzed thoroughly. Still, it is too early to say which option will be pursued," commented Treasury Minister Wojciech Jasiński. "The merger makes sense in organizational and financial terms, but each company should retain legal independence," he added.

Long-running as it has been, discussion on the issue is devoid of any concretes, and no plausible economic arguments have been raised, said Michał Przybyłowski, an expert from the Gdańsk Institute for Market Economics (IBnGR). According to Przybyłowski, whatever form it takes, a fusion of the companies would be neither a proper nor necessary means of guaranteeing them against a takeover. What's more, the state has a range of tools - meaning the "golden veto" or a voting cap which limits large shareholders' voting power to, say, that of a 20-percent stake - to retain control over the firms regardless of size of the stake it holds in them.