Poland treasury ministry confirms ZAP may be merged into ZAT

12 July 2012 17:39  [Source: ICIS news]

LONDON (ICIS)--Poland is considering a further consolidation of the country's chemical industry around Zaklady Azoty Tarnow (ZAT) as an alternative to accepting bids for ZAT and fellow Polish chemical group Zaklady Azotowe Pulawy (ZAP), the Polish treasury minister said on Thursday.

The ministry was continuing to consider a bid for ZAP from Polish synthetic rubber producer Synthos, and to oppose an offer for ZAT from Russian mineral fertilizer producer Acron Group, but it was also seriously studying the option of merging ZAP into the ZAT group, he added.

“We desire that ZAT should be at the centre of the consolidation of the Polish chemical industry,” said Mikolaj Budzanowski.

The merger scenario has been under discussion among chemical industry analysts for several days since news of it leaked.

A combination of the two groups could solve the dilemmas of the ZAT and ZAP management boards, which are opposed to the Acron and Synthos bids, respectively.

However, Prague-based investment bank Wood & Company has cautioned that competition regulators may be alarmed that such a merger would create a fertilizer giant that would dominate the domestic market.

Regulators might only give their assent to the merging of the two companies if they looked at the fertilizer market from the European, rather than solely the Polish, perspective, it added.

ZAP is a producer of fertilizers, melamine and caprolactam, while the product range of ZAT which, with treasury backing, has in the past two years taken over fellow state-controlled chemical producers Zaklady Chemiczne Police (ZChP) and Zaklady Azotowe Kedzierzyn (ZAK), includes fertilizers, caprolactam, nylon 6 (or polyamide 6), oxo-alcohols, plasticisers and titanium dioxide (TiO2).

Under current treasury ministry policy, the remaining state-held chemical industry assets in Poland should be consolidated before being sold off, before the end of 2013 if it proves possible.

Earlier on Thursday, Synthos, in a move aimed at persuading the treasury ministry to sell it the 50.67% state stake in ZAP, said it would provide ministers with a written pledge that should it gain control of ZAP it would not sell on its shares in the company for at least five years.

By: Will Conroy
+44 20 8652 3214

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