PKN has agreed the terms of selling Spolana to Anwil

PKN Orlen approved the terms and conditions of the Share Purchase Agreement between Unipetrol and Anwil for the sale of 81.78 % of the shares of the Unipetrol subsidiary – Spolana, the company announced in its statement.

Our view: The deal only means the reshuffling of the businesses inside PKN group and through the merging of the PVC production activities it makes Anwil the largest PVC supplier in CEE. As certain minority owners in Unipetrol and Spolana have criticized the deal, PKN decided to announce a public tender last year in order to make the disposal/reorganization more transparent. However, realizing the real intention of PKN bidders (mostly competitors) only took part at the beginning of the tender trying to look into the books of Spolana but then they stepped back before spending a lot on advisory. As a result, PKN’s Anwil remained the only real bidder for Spolana.

Thus, the news that Anwill has finally managed to take over Spolana is not surprising for us. Until the price is not disclosed, we cannot calculate direct financial impacts on PKN earnings. However, its impact will only appear in 4Q06 and it is unlikely to be major, in our view (Please note here that PKN has 84% stake in Anwil, but only 63% in Unipetrol) We expect neutral market reaction to the news.