The European Commission has approved Polish state oil giant PKN Orlen’s proposal to takeover Polish peer Grupa Lotos.

The acquisition is expected to help PKN Orlen become a global player in the oil business.

The proposed takeover forms part of a wider plan by Poland’s ruling Law and Justice (PiS) party to create ‘national champions’ by increasing control over the economy. Both the firms are state controlled.

Orlen CEO Daniel Obajtek was quoted by Notes From Poland as saying: “We have obtained the approval of the European Commission for the merging of PKN Orlen and Grupa Lotos.

“This is a groundbreaking moment for the effective implementation of the energy transformation, increasing the resource independence and security of the region.”

The transaction, which is now due to receive approval from shareholders of both the companies, is planned to be completed in late July or early August, Reuters reported Obajtek as saying in a press conference.

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Obajtek added: “The merger is necessary not only from the perspective of the further development of both groups, but also building their value for shareholders, Poland’s energy security, and the interests of individual customers and local communities.”

The Polish state treasury, which currently holds a 53.19% interest in Lotos and a 27.51% stake in Orlen, is expected to own approximately 35% of the new group, according to Reuters.

Pkn Orlen initiated the acquisition of Lotos Group in 2018 with the signing of a Letter of Intent with the Polish State Treasury.

In 2020, the European Commission conditionally approved PKN Orlen’s takeover of Grupa Lotos.

In January this year, Orlen agreed to sell some of Lotos’ assets to Hungary’s MOL, and Saudi Aramco, to meet EU antitrust rulings.

Shareholders of Grupa Lotos will receive 1.075 shares of PKN for each share held.