Post-merger strategy may split chems, ferts between Poland's ZAT, ZAP

03 September 2012 15:54  [Source: ICIS news]

LONDON (ICIS)--The post-merger strategy of Polish groups Zaklady Azoty Tarnow (ZAT) and Zaklady Azotowe Pulawy (ZAP) could turn the former into a company that solely produces chemicals and the latter into a producer that only manufactures fertilizers, the Polish treasury ministry said on Monday.

Ministry officials are examining the feasibility of the approach which stands a fair chance of gaining the endorsement of the management boards of both the state-controlled groups, it added.

The strategy might see ZAT, which currently produces nitrogen fertilizers, caprolactam (capro) and polyamide 6 (nylon 6), take over the management of ZAP's melamine and capro production.

ZAP, on the other hand, which is Poland's largest nitrogen fertilizer producer, and a maker of phosphorous fertilizers through the Fosfory Pulawy (formerly Fosfory Ciech) company in Gdansk which it acquired last year, would be put in charge of the operation and development of ZAT's fertilizer division, the ministry said.

The strategy would also have to deal with how to manage the multi-component fertilizer and titanium dioxide businesses of ZAT subsidiary Zaklady Chemiczne Police and the nitrogen fertilizer and oxo-alcohols units of another ZAT subsidiary Zaklady Azotowe Kedzierzyn, it added.

The treasury ministry estimates that the combined fertilizer output of the ZAP and ZAT groups would make up the second largest fertilizer production capacity in Europe.

At approximately 3.5bn cubic metres of natural gas per year, the combined ZAP-ZAT entity would consume about one-third of Poland's natural gas imports, a level of consumption that outstrips the total required by some countries in Europe, the ministry also notes.

On 30 August, deputy treasury minister Rafal Baniak said that the Polish government is committed to a “merger of equals” when it comes to the combination of ZAT and ZAP.

The treasury ministry has come under pressure from the management, unions and Workers' Council advisory body at ZAP to give the company at least an equal role in the merger.

They point out that ZAP in recent years has achieved a better operational performance and superior profitability compared with ZAT.

($1 = €0.79)

By: Will Conroy
+44 20 8652 3214

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