Opinion

Consolidation in the Polish Energy Construction Sector

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Last updated: 19th Apr 2011

On 8th of April PBG S.A. (“PBG”, Bloomberg “PBG EQUITY”) made a tender offer for 29.1 mn of Energomontaz-Poludnie S.A (“EPD”, Bloomberg “EPD PW EQUITY”) shares at PLN 4.1 per share. The potential deal value stands at PLN 119.3 mn (EUR 30.1 mn). Subscription for the offer will be held between 23 May and 15 June 2011.

However, EPD’s current shareholders are unlikely to be receptive to the tender due in part to PBG’s pricing expectations which are based on 2010’s somewhat disappointing financials rather than the firms underlying business potential. Nonetheless, the announcement is a clear indication that the Polish energy, construction and engineering sectors will likely consolidate over the next one/two years.

PBG, the parent to PBG Group -valued at EUR 630 mn-, specialize in infrastructure projects (gas pipelines, storage and logistics terminals, water and sewage, roads), and industrial and general construction.

In early 2010 PBG made steps towards increasing its involvement in energy projects by acquiring a 25% plus 1 share stake in EPD.

EPD is a Katowice based mid-sized contractor that specializes in energy and industrial projects with a focus on assembly, modernization and repairs.

They also perform power plant installations and were recently involved in the construction of a number of new power plant facilities across Europe, notably in Poland, Germany and the Netherlands.
The company also has a track record in coking, cement, chemical and refining plants, and in the assembly and installation of industrial machinery.

This move by PBG may very well prove to be a catalyst for more market activity in the Polish energy sector.

Piotr Olejniczak
Director
IPOPEMA

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