EU likely to reject PKN’s bid for Lotos

Poland’s biggest oil refiner PKN Orlen (PKN.WA) is expected to face a full-scale EU antitrust investigation into its planned takeover of rival Lotos and may even face a veto due to their combined market share, people familiar with the matter said.
State-run PKN said last year that it plans to buy at least a 53% stake in its nearest rival Lotos (LTSP.WA), which has a market capitalization of 15.9 billion zlotys ($4.23 billion), from the government.

PKN submitted a draft notification of the deal to the European Commission in November and said it expected the Commission’s approval by mid 2019 so that it could be completed by the end of the year.

But the refiner formally requested approval from the Commission only on Wednesday and sources familiar with the situation in Brussels and Warsaw said that due to competition concerns PKN will likely face long and difficult talks with the Commission.

The Commission can either clear the deal with or without conditions after its preliminary review or it can open a four-month long investigation.

Sources said PKN faced a four-month probe since the combination of companies ranked No. 1 and No. 2 in a sector is always problematic for EU competition enforcers.

And in Poland’s case, it is not clear which other rival can step up to provide a viable alternative to the market, they said.

In a response to Reuters e-mailed on Thursday, PKN said the formal request for the Commission’s approval submitted on Wednesday comes after a year’s worth of preparation and talks with the Commission.
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