Polish Briefing: Orlen can benefit from PGNiG acquisition, says Fitch

What goes on in Poland on the 17th of July.

Orlen can benefit from PGNiG acquisition, says Fitch

The financial policy and the updated strategy are important for assessing the impact of the acquisition on the rating of PKN Orlen, Fitch agency reported. According to analysts, if the acquisition of Grupa Lotos and PGNiG is completed, the credit profile of PKN Orlen will benefit from a larger scale, full integration and expansion in a more stable sector.

Fitch Ratings has maintained its current rating of “BBB-” with a stable financial outlook. Analysts emphasize that the acquisition of mining, distribution and energy assets of the PGNiG Group, in combination with the recent acquisition of the generation and distribution assets of the Energa Group, will be profitable for PKN Orlen. This is related to the projected change in Poland’s energy mix, which assumes greater use of renewable electricity and natural gas.

The Fitch agency emphasizes that the credit measures of the merged group as well as its financial policy and strategic direction will be important for assessing their impact on PKN Orlen’s ratings. It is also about the ratio of post-trade links between these companies.

PGNiG may be included on the Rating Watch Negative (RWN) list if the transaction enters the stage of a tender offer, an announcement of their replacement or other form of ownership change. RWN reflects the risk of a strong link between PGNiG and a capital group with a lower rating. Fitch assumes that PKN Orlen’s rating will remain at “BBB-“. This will happen after the acquisition of PGNiG and another large takeover of the second largest crude oil company in Poland, i.e. the Lotos Group. – In this scenario, and assuming strong ties between PKN Orlen and PGNiG as part of the Fitch rating criteria for the parent and subsidiary, PGNiG’s rating would be influenced by the rating of PKN Orlen.