ZAP board urges owners to stick with its strategy, reject Synthos

09 July 2012 14:31  [Source: ICIS news]

LONDON (ICIS)--Zaklady Azotowe Pulawy (ZAP) is this week meeting with shareholders to lobby against a takeover by fellow Polish chemical producer Synthos which it says would undermine its own successful investment strategy, ZAP said on Monday.

Synthos, as Europe's second largest producer of synthetic rubber, did not have the focused expertise to pursue the organic and acquisition-driven growth for nitrogen fertilizer, melamine and caprolactam (capro) maker ZAP that the current management had in mind, it added.

“We are in the middle of an investment programme that will have very positive effects for ZAP,” said ZAP CEO Pavel Jarczewski.

“The Polish [chemical] market is fragmented, there are still a lot of good companies to take over,” he added, detailing how ZAP, which he said has strong cash reserves, is eyeing targets such as fertilizer assets held by another large state-controlled Polish chemical group, Ciech.

ZAP and Synthos have conflicting visions as to how to secure the company's energy supplies for coming decades, ZAP also noted.

ZAP and 50:50 joint-venture partner Polish utility PGE are to launch a tender in late July or early August to select a general contractor for the construction of an 840MW gas-fired power plant that would start operating in 2016 or 2017.

However, Synthos has said that if it succeeds in taking over ZAP with its zlotych (Zl) 1.96bn ($568.1m, €463.4m) bid, it would switch the fuel for the plant to coal, in order to cut costs. The carbon pollution obstacles posed by the use of coal in the future would be negotiable, it says.

Poland's treasury ministry, which holds a 50.67% stake in ZAP, has said it will respond to Synthos' offer before 20 July when the first phase of the bid, during which a higher price is on offer to shareholders, expires.

ZAP has advised all shareholders that the offer is below fair value.

Synthos, a company owned by Polish billionaire Michal Solowow, says it has submitted an offer which would provide shareholders with a fair price for their holdings and ZAP with the backing of a strong chemical group that would seek to expand its product portfolio downstream, with polyamide 6 (nylon 6) and other new production units.

However, Synthos' bid is also facing opposition from the unions at ZAP, who are backing a rival offer formulated by Spolka Pracownicza Chemia-Pulawy, a limited liability company set up by ZAP employees and union members.

Last week, the unions held a street protest of around 200 workers in Pulawy, a town south-east of Warsaw, in which most of ZAP's production units are located.

($1 = €0.82)
($1 = Zl3.45, €1 = Zl4.23)


By: Will Conroy
+44 20 8652 3214



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