Polish business daily Puls Biznesu speculates that PGNiG would buy 36.7% stake in chemicals company Ciech from state-controlled mining company Kompania Weglowa, which is in the very poor financial condition. Ciech shares owned by KW allow the State to control the chemicals company and it does not want to lose that. This fuels the speculation of Puls Biznesu that shares should be bought by another state-controlled company, which is supposed to be PGNiG. The press reports that the decision is expected very soon, may be even tomorrow, adding that deputy minister of economy Pawel Szalamacha named their information as pure speculations. Spokesman of PGNIG also commented that their medium term strategy does not include buying chemical companies.
Our view: We see the news as a risk factor for minority owners. 36.7% stake in Ciech might worth some US$ 240m, 3.2% of the market cap of PGNiG. Since Ciech has large fertilizer makers in its portfolio, which are major buyers of PGNiG’s natural gas, we would not call the information of Puls Biznesu as completely groundless. Until now, government only threatened with affecting the strategy of PGNiG, but this news might indicate that this danger is closer than expected. The news might indicate PGNiG’s investors would take profits after the impressive rally of the share price in the past few days.