The letter of intent was signed on Tuesday, Polish state news agency PAP reported.
The agreement was "entered into due to an intention to start talks about the potential acquisition of GA Puławy by PKN Orlen,” GA Puławy’s parent company, Grupa Azoty, said.
The letter of intent is “a non-binding document that specifies PKN Orlen’s access to information about GA Puławy, as part of PKN Orlen’s due-diligence review of GA Puławy,” Grupa Azoty added.
At a news conference in Puławy, eastern Poland, PKN Orlen's CEO Daniel Obajtek said that “in tough times, industries must be consolidated,” public broadcaster Polish Radio’s IAR news agency reported.
He added that PKN Orlen would begin its due-diligence review of GA Puławy in July, and “further steps regarding acquisition will be made depending on the results.”
‘Many synergies’
Obajtek told reporters that PKN Orlen and GA Puławy “share many potential synergies to exploit” in areas such as “technology, operations, sales and logistics” and can also “work together on research and development,” the IAR news agency reported.
By taking over GA Puławy, PKN Orlen would “increase its presence in the fertiliser sector” and the many synergies would “boost its efficiency and competitiveness on the European market,” Obajtek said.
Meanwhile, “customers, including farmers, would benefit from a better and wider range of fertilisers and a better availability of products thanks to more flexible manufacturing processes,” he added.
Obajtek also said that the state-run Orlen Group “has experience in takeovers,” and cited its 2012 acquisition of the “near-bankrupt” chemicals maker Anwil, which is now “performing very well,” the PAP news agency reported.
GA Puławy is listed on the Warsaw Stock Exchange. It produces nitrogen fertiliser and melamine, as well as hydrogen peroxide and other chemicals, according to PAP.
(pm/gs)
Source: IAR, PAP, rp.pl, orlen.pl, pulawy.grupaazoty.pl