Merger of fuel giant Orlen with Lotos was economically unjustified - audit
The Supreme Audit Office (NIK) has deemed that the merger of Poland's largest fuel company, Orlen, and its peer, Lotos, did not have a sound economic justification, the NIK president announced on Tuesday.
On Tuesday, NIK presented an audit report on the merger of Orlen and Lotos, both state-controlled companies, in 2022.
Marian Banas said that for the merger to happen, Orlen, at the request of the European Commission, applied remedies aimed at limiting the dominant position of the new entrant in the fuel market. Within these requirements, Orlen had to sell some of the assets of the Lotos group.
"The key point of our findings is that this transaction was carried out for a price of about PLN 5 billion (EUR 1.2 bln) lower than the market value," Banas said. "Such mismanagement of the board harms the Polish economy," he added.
"Additionally, to give this transaction the resemblance of profitability, Orlen included in the presentation of the merger results data about future unreliable synergies worth PLN 10 bln (EUR 2.3 bln)," Banas said. "These prognostics were false."
The head of NIK also said that "as a result of this merger, the Polish treasury lost control over about 20 percent of the market of refinery products and had less control of the country’s key energy resources, which in turn caused serious risk for our fuel security."
He added that within the framework of the transaction, the Orlen and Lotos group companies were hiring third-party legal advisors, who were paid PLN 200 million (EUR 46.7 mln) instead of relying on the General Counsel to the Republic of Poland. (PAP)
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