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WARSAW, July 14 (Reuters) - Poland laid out plans on Tuesday to merge four of its largest energy groups in a move the government hopes will create a major regional player, with the country’s largest refiner PKN Orlen taking on the risk of another large deal.
The ruling Law and Justice (PiS) party has sought to increase state control over the economy, halting privatisations and merging some state-controlled companies, with PKN leading the consolidation drive.
“We are building a powerful global multi-energy group in Poland,” said State Assets Minister Jacek Sasin.
PKN Orlen on Tuesday received conditional EU antitrust approval to take over smaller rival Lotos, and said it plans to buy Poland’s largest gas company PGNiG , having already acquired utility Energa this year.
The Polish state is the biggest shareholder in PKN Orlen, Lotos and PGNiG.
Ipopema Securities analyst Robert Maj said he saw few benefits from a PKN takeover of PGNiG. “There is no rational explanation why PKN is buying PGNiG. These are strictly political projects,” he said.
Michal Kozak, analyst at brokerage Trigon DM, said investors had expected it to buy PGNiG if the Lotos deal fell through, not in addition to that acquisition.
“For Orlen, this is another risk because it is planning another large transaction ... the company’s debt could increase, which would be a risk especially if macroeconomic conditions worsen,” he said
Polish Prime Minister Mateusz Morawiecki said the combined energy group could generate core profit of up to 20 billion zlotys ($5.1 billion).
He added that the merger with Lotos would not result in job cuts.
PGNiG’s shares were up 5.2% at 1252 GMT, with Lotos up 6.5%.
PKN Orlen Chief Executive Daniel Obajtek said that, as a condition for EU approval of the Lotos deal, the company had agreed to sell some of its petrol stations in Poland but was also planning to swap assets with competitors in other parts of Europe. (Reporting by Anna Koper, Pawel Florkiewicz and Gdansk Newsroom Writing by Alan Charlish Editing by Jane Merriman and David Goodman)