September 3, 2019 / 3:21 PM / 3 months ago

PKN hints it could offer asset swap with competitors to ease Lotos merger

FILE PHOTO: The logo of PKN Orlen, Poland's top oil refiner, is pictured at petrol station in Warsaw, Poland April 25, 2019. REUTERS/Kacper Pempel

KRYNICA ZDROJ, Poland (Reuters) - Poland’s biggest oil refiner PKN Orlen signaled on Tuesday that it could offer to swap assets with competitors in order to ease EU regulators’ concerns about its planned merger with rival Lotos.

PKN’s Chief Executive Daniel Obajtek said the state-run company plans to submit a paper to the European Commission this month offering steps it may take in order to convince Brussels to approve the merger with Lotos.

Obajtek was asked during a news conference whether his company will be forced to sell some assets in order to secure the Commission’s approval. He suggested that an asset swap could be possible with its competitors.

“By the end of this month we will submit remedy conditions to the EC, that are to allow the transaction to be beneficial (for PKN),” he said.

After the news conference a source close to PKN Orlen said PKN was conducting talks with its competitors that may in the end conclude with asset swaps, for example, with regards to petrol stations or its wholesale business.

The source did not say which assets may be subject to the potential swaps.

Earlier on Tuesday, BP’s head for Europe said BP might be interested in taking over PKN’s assets if they are put up for sale as a condition of the merger approval process. [nL5N25U2WA]

PKN, which has a market capitalization of 39 billion zlotys ($9.9 billion) said last year that it planned to buy at least a 53% stake in Lotos, which is valued at 16.14 billion zlotys, from the government.

It has formally requested approval from EU regulators for the deal to go ahead. Sources have said that due to competition concerns PKN will likely face long and difficult talks with the European Commission.

Reporting by Marcin Goclowski and Wojciech Zurawski; Editing by Alan Charlish and Susan Fenton

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