ZAP seeks 'merger of equals' with Polish chemicals peer ZAT

27 August 2012 14:02  [Source: ICIS news]

PolandLONDON (ICIS)--The management of Zaklady Azotowe Pulawy (ZAP) is opposed to the proposal that fellow Polish chemical group Zaklady Azoty Tarnow (ZAT) should take ZAP over and is instead supporting efforts to combine the producers in a “merger of equals”, it said on Monday.

The move by ZAP's management follows a 21 August protest by the the Associated Trade Union of Professional Engineers and Technicians of ZAP outside the Polish treasury ministry, which holds controlling stakes in both chemical groups and wants to create Europe's second largest fertilizer producer by combining them.

The union, in common with the Workers’ Council of ZAP - an advisory and consultative body - says that given ZAP's financial and operational superiority over ZAT in recent years, it should either be ZAP taking over its peer, and not vice versa, or there should be a merger in which each company is treated as an equal partner.

ZAP is currently cooperating with ZAT regarding the combined future of the companies but more extensive talks on the way forward were scheduled for September, according to ZAP CEO Pawel Jarczewski.

In the meantime, ZAP is also on the lookout for acquisition opportunities, with the plant protection unit of another state-controlled Polish chemical group, Ciech, one option if Ciech opts to sell it, he said.

Piotr Drozd, an analyst at Prague-based investment bank WOOD & Company said “the concept of a 'merger of equals' clearly makes the merger with ZAT more palatable for ZAP's management”.

“We expect that talks on the role and position of ZAP within the merged chemicals group are likely to continue, the merger remains the central scenario and is more of a matter of 'how' rather than 'if',” he added.

Apart from fertilizers, the ZAT group also produces caprolactam (capro), polyamide 6 (or nylon 6) and plasticizers. As well as nitrogen fertilizers, ZAP is also a producer of capro and melamine.

By: Will Conroy
+44 20 8652 3214

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