PKN Orlen bid more than US$2.5 billion for a 94.4 percent stake in Lithuanian refiner Mazeikiu Nafta, Polish newspaper Gazeta Wyborcza said on Friday, citing unidentified sources at the Polish oil company.
We consider PKN's bid as favorable for investors as it came lower than our value estimate of roughly US$ 3.0bn. However, it is still a concern if PKN could get Mazeikiu due to hefty competition (Lukoil, TNK-BP and KazMunaiGaz are the standing bidders for Yukos’ 54% stake. No doubt for us, that a political decision would be made and the Russian companies who are able to supply Mazeikiu Refinery with crude oil are somewhat better positioned in this game.
We maintain our Buy recommendation on the stock with our fair value estimate of PLN 70.5 per share.