Warsaw circles the wagons against Russian chemicals bid

By bne IntelliNews July 16, 2012

Tim Gosling in Prague -

Hot on the heels of a "final" improved offer from Russia's Acron for Azoty Tarnow, shareholders of Poland's biggest chemicals company approved a defence plan to increase share capital by 75% and acquire state-controlled competitor Pulawy. The move turns on its head an earlier announcement by Warsaw of plans to sell off all state-owned assets in the sector.

At an emergency general meeting on July 14, Tarnow shareholders, led by the state with a 32% stake, voted to back management's plans to issue stock worth PLN240.4m, according to PAP. The issue will be offered to shareholders of Pulawy at a ratio of Tarnow shares to Pulawy shares of 2.5:1.

Russian fertilizer maker Acron first made an offer for Tarnow in May at a slight discount to the market. The Polish government resisted the bid, as much out of opposition to selling a major asset to Russia as to the price.

Meanwhile, asked about an offer - slightly above the market at PLN102.5 per share - from Polish synthetic rubber maker Synthos for Pulawy, Treasury Minister Mikolaj Budzanowski suggested on July 12 that the government could scrap the planned sales of both chemicals concerns to merge them.

That suggestion is becoming a reality in rapid fashion. Tarnow promptly announced a bid to buy 32% of Pulawy - the state already holds 51% - at PLN110 per share the following day, saying that it sees PLN100m (€24m) in synergies and investment savings of PLN200m. Whilst the initial response to the Synthos offer for Pulawy in June appeared positive - Economy Minister Waldemar Pawlak called it "a very interesting proposition" - Deputy Treasury Minister Pawel Tamborski made it clear that Warsaw now suspects it may be no more than a front for Acron to get its hands on the company down the line. Unions at Pulawy have also called for the Synthos bid to be rejected.

The circling of the wagons to merge the two Polish companies followed an improved bid from Acron for Tarnow, as the Russian company looked to increase the pressure with what it stressed was a "final offer." It raised the price by 25, from PLN36 per share to PLN45, for a 66% stake, which values the company at PLN1.96bn (€467m), and gave shareholders the weekend to think it over.

Acron added that it may discuss purchasing a smaller stake than the 66%, should shareholders reject the additional share issue. However, that was always unlikely once Warsaw - the biggest shareholder with 32% - put its weight behind the management plan for a merger.

Tempers are fraying as Warsaw's antipathy towards Russian ownership of Polish assets has magnified, as illustrated by the words of Acron deputy CEO Vladimir Kantor in a company statement accompanying the improved offer. "The last weeks have proven that our offer is the only one on the market - all other scenarios are only speculations and do not raise the value for shareholders," he insisted. "We underline that our offer is valid until Monday, July 16, and is final."

Hence the speed with which Warsaw has turned the merger scenario from speculation into reality. Throughout the year, the government has been desperate for serious interest in both Tarnow and Pulawy to emerge, with privatization of the chemicals sector designated an early part of the plan to supplement the budget with PLN10bn revenue in 2012. However, it rustled up little interest until May, much as assets in many other sectors set for sales are struggling to find investors. However, Russian ownership is apparently a step too far.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss