Poland’s ZAT, ZAP release 'merger of equals' roadmap

21 September 2012 10:37  [Source: ICIS news]

LONDON (ICIS)--Poland’s Zaklady Azoty Tarnow (ZAT) and Zaklady Azotowe Pulawy have released a roadmap for a merger that will create Europe’s second largest fertilizer company by revenue, the two chemical groups said on Friday.

In line with the agreed strategy of undertaking a “merger of equals”, the management boards of the companies within the new group would comprise equal numbers of current ZAT and ZAP executives, they added.

“The agreed negotiations framework, coupled with the backing of the Polish treasury ministry [the controlling shareholder in both groups] for a ‘merger of equals’ should mitigate ZAP management’s fears of marginalisation,” said Piotr Drozd, an analyst at investment bank WOOD & Company.

The roadmap sees ZAT and ZAP deciding on corporate governance issues and ongoing investment projects by 30 October.

No later than 30 days after ZAT’s capital increase — ZAT intends to gain control of ZAP by using the capital increase in a share swap agreement, conducted at a rate of 2.5 ZAT shares per ZAP share, to acquire the 50.7% of ZAP held by Poland's treasury ministry — the companies would discuss strategy and synergies, it states.

Key points of the future strategy are the inclusion of shares in the new group in the Warsaw Stock Exchange’s WIG20 index, achieving one of the highest Return on Equity (ROE) figures within the chemical industry and maintaining the position of the group as one of the leaders on the European fertilizer market.

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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