Poland's ZAT unveils 8-year strategy to help fend off Acron bid

13 June 2012 16:28  [Source: ICIS news]

LONDON (ICIS)--Zaklady Azoty Tarnow (ZAT) has unveiled a 2012-2020 strategy in a move made partly to convince shareholders that a bid for control of the Polish chemical group by Russia's Acron Group is of poor value, ZAT said on Wednesday.

The strategy outlined how ZAT - Poland's largest chemical group, with 2011 revenues of zlotych (Zl) 5.3bn ($1.5bn, €1.2bn) - is targeting an annual earnings before interest and tax (EBIT) margin of more than 8% over the 8-year period and a return on equity (ROE) of more than 12%.

A source at the treasury ministry, the majority shareholder in ZAT with a 32.05% stake, said officials believed a “white knight” second bidder for the group could make itself known in the near future.

Both the ministry and ZAT's management board have stated that Acron's bid, amounting to Zl1.5bn for 66% of the company, is too low as it fails to take proper account of the potential earnings that will be generated by an expansion strategy.

The 2012-2012 plan envisages ZAT maintaining its core chemical products as caprolactam (capro), polyamide 6 (nylon 6), nitrogen and multi-component fertilizers, oxo-alcohols and titanium dioxide (TiO2), the group said.

Already under way is a project to substantially build up capro production from the current 101,000 tonnes/year, possibly both in Poland and in China or Taiwan, while the strategy also sees ZAT moving into specialty chemicals, it added.

"The group plans to expand its offered product range in fertilizer and specialty liquid fertilizers, and increase the production capacity for nitrate fertilizer granules. In addition, upgrades will be carried out at ammonia lines, targeted mainly at reducing the energy intensity of processes,” the strategy said.

“In the event of favourable market conditions, the group will carry out mergers, acquisitions and strategic alliances [in expanding production],” it added.

Shareholders have been invited by Acron to accept its offer in a bid window that runs from 6 June to 22 June.

Acron has defended its bid as fair-value because of strong factors such as the cheap raw materials which ZAT would gain access to in Russia once it became a subsidiary.

($1 = Zl3.46, €1 = Zl4.33)


By: Will Conroy
+44 20 8652 3214



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