Poland's Enea Makes $398 Million Bid for Bogdanka Coal Miner

  • Utility offers to buy coal producer at 29 percent premium
  • Bid doesn't reflect real value, biggest shareholder Aviva says

Enea SA offered to buy a controlling stake in Lubelski Wegiel Bogdanka SA for 1.48 billion zloty ($398 million) to combine the Polish state-controlled power utility with a privately-held coal producer. Shares in Bogdanka soared the most on record.

Poland’s fourth-biggest utility offered to purchase a 64.6 percent stake in Bogdanka at 67.39 zloty per share, or a 29 percent premium to Friday’s closing price, Enea said in a statement on Monday. The move comes as the government last week backed away from the plan to push power groups to invest in unprofitable state-run coal miners, which compete with Bogdanka.

“We want to become an integrated power group and Bogdanka is a step in this direction,” Krzysztof Zamasz, Enea’s chief executive officer, said in an interview with Bloomberg News. “We want to buy Bogdanka, but not at any price. This is not a hostile bid.”

Shares in Bogdanka surged 26 percent, the most in six years, to 65.55 zloty at 2:27 p.m. in Warsaw. Enea gained 0.8 percent to 14.2 zloty. The coal producer’s stock slumped 11 percent last month after Enea canceled a long-term supply contract with the miner.

Securing coal supply is “a step in the right direction, but not at a time” when fuel prices are dropping due to oversupply, Bartlomiej Kubicki, an analyst at Societe Generale SA in Warsaw, said in e-mail. “The bid price is attractive, while Enea is at risk of overpaying.”

Real Value

Last month Enea, whose Kozienice power plant is Bogdanka’s main customer, scrapped a 15-year, 10.4 billion-zloty contract with the miner, saying the price of the fuel was too high. It came less than two weeks after Zamasz told Parkiet newspaper Enea may bid for Bogdanka. Zbigniew Stopa, Bogdanka CEO, said then there were no talks on a potential takeover.

Pension funds of Aviva Plc., NN Group NV and PZU SA hold a total of 30 percent in Bogdanka. Aviva PTE SA, the biggest shareholder with a 12 percent stake, is analyzing the offer, Chief Investment Officer Marcin Zoltek, told Bloomberg News. “Our first impression is that the bid doesn’t reflect Bogdanka’s real value.”

Ewa Radkowska-Swieton, CIO at ING’s pension fund unit, didn’t answer calls to her mobile, while Andrzej Soldek, CIO at PZU PTE SA declined to comment.

It’s the second bid for the miner since the government sold its controlling stake in March 2010. Later that year, New World Resources Plc, a Czech coal producer, offered 100.75 zloty per share to buy Bogdanka. The management and the shareholders rejected the bid, saying it was “drastically low.” Bogdanka didn’t have immediate comment on Monday.

Ailing Mines

The government had planned to use the state-controlled utilities to help it save state coal mines located in the southern Polish region of Silesia as thermal coal prices declined to at least an eight-year low of $50.65 a ton this month from the average of $99 a ton in 2010. The Treasury Ministry announced last week a revised rescue plan for mines, which excluded forcing utilities to foot the bill. Law & Justice party, the country’s largest opposition party that leads in polls before the Oct. 25 parliamentary election, sees the need to combine coal mining with power groups.

“Enea’s bid is a way to protect itself from the need to support Silesian mines,” Tomasz Duda, an analyst at Erste Group Bank AG in Warsaw, said in a note. “By making the offer, Enea showed that it is unlikely to switch to other suppliers than Bogdanka.”

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