PKN Orlen bids for Lithuanian Government’s stake in Mazeikiu

PKN Orlen has offered to buy a 40.7% stake in Mazeikiu Nafta from the government Lithuania, according to Bloomberg. PKN has also offered to buy an additional 53.7% stake from Lithuania, if the government buys the shares from Yukos, PKN said in a statement on Thursday. The exact price of the bid was not disclosed, however PKN said, it would invest US$1bn to upgrade the refinery.

In our view, for PKN Orlen crude oil supply of Mazeikiu Refinery could be the critical point of the acquisition, however, PKN is confident in being able to provide supply. Secondly, we would highlight that we can expect high competition for the Refinery most probably from KazMunaiGaz and Russian oil companies. Currently, we see the new as neutral. We reiterate our Buy recommendation and our PLN 70.5 per share fair value estimate on the stock.

Polish market note
We remind that the Polish Stock Exchange is closed on Monday, April 17 for Easter Holiday. Trading resumes as normal on Tuesday, April 18.