PKN Orlen buys 5% stake in Mazeikiu after public call

PKN Orlen increased its share in its Lithuanian unit Mazeikiu Nafta (MN) by 5% to at least 89%, company said in a statement yesterday after market close. The minority shareholders signed the Mazeikiu Nafta share sale orders for 35,879,247 shares, standing for 5.06 % of the initial capital of Mazeikiu Nafta. Total value of the purchased shares amounts to PLN 412.5m ( LTL 367.8m) based on LTL/PLN average exchange rate as of 15 January 2007, stated by National Bank of Poland.

Our view: The action was previously planned and thus expected by the market. Per share price was the same (LTL 10.25) as by purchase of Yukos and Government stake, however 2% lower in dollar terms (3.84 US$ versus 3.93 US$) due to cross rate changes. After the deal only 0.74% free float left on the market (worth some US$ 20m), thus we expect PKN to further squeeze out the minority shares from the market and finally make MN a privat company. We expect the news to have no major impact on PKN share price.