ZAP management advises Polish treasury not to accept Synthos offer

06 July 2012 11:10  [Source: ICIS news]

LONDON (ICIS)--Poland's treasury ministry is continuing to analyse Synthos' bid for state-controlled chemical group Zaklady Azotowe Pulawy (ZAP) despite having been advised by ZAP's management that the offer is below fair value, ministry officials said on Friday.

A decision from the ministry on whether to sell its 50.67% ZAP stake to the Polish synthetic rubber producer would be issued prior to the 20 July expiry date of the first phase of Synthos' zlotych (Zl) 1.96bn ($576.4m, €464.5m) bid.

In the first phase, running from 9–20 July, Synthos is offering Zl102.5 per share, while in the second phase, which expires on 7 August, Zl98.85 per share is on offer (this figure was increased from Zl98.77 per share on 3 July).

In its official response to the offer, ZAP's management said the takeover could seriously hinder the company's growth strategy.

The offer price of Zl102.5 per share does not reflect the positive impact of the completed and planned investments at the nitrogen fertilizer, caprolactam (capro) and melamine producer, it added.

“Any acquisition of control of ZAP by the bidder may jeopardise the current development strategy and adversely affect the value of the group," the management board stated in the response, advising shareholders not to accept the bid.

Synthos has said it believes its offer certainly does meet the fair value criterion and that it would not be tempted into buying ZAP “at any price”.

The strategy of Synthos would be to build up a strong domestic player in the chemical sector with bolstered profitability and an expanded product portfolio, including polyamide 6 (nylon 6), according to Synthos CEO Tomasz Kalwat.

“All in all, we believe that Synthos' acquisition synergies will require some time to be unlocked and, as its CEO has stated, will be evolutionary and not revolutionary,” investment bank Wood & Company said in its latest assessment of the bid.

($1 = Zl3.40, €1 = Zl4.22)


By: Will Conroy
+44 20 8652 3214



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