Croatian competition watchdog clears INA-PPD acquisition of Petrokemija

The Croatian competition watchdog AZTN on Wednesday assessed as permissible the deal by which dominant oil and gas company INA and natural gas supplier Prvo Plinarsko Drustvo (PPD) will invest in the recapitalization of artificial fertiliser Petrokemija and will indirectly acquire joint control of the company through a special purpose company Terra Mineral fertilizer (TMG). TMG will have a minimum of 50% plus one share in Petrokemija following the completion of the transaction, thus granting INA and PPD an indirect control over it. The antitrust office assessed that the model of the transaction will secure that INA and PPD will not act jointly, via TMG, as suppliers of gas to any large industrial natural gas customers in Croatia. The watchdog noted that the gas market in Croatia is broadly liberalised and open and there are no significant barriers to entry into the market. Therefore, AZTN concludes that the concentration would not have the effect of restricting gas supply in Croatia.

Note that earlier this month INA and PPD asked for clearance from BiH’s competition authority to acquire a stake of 53% to 55% in Petrokemija as although all three companies are based in Croatia, the acquisition is expected to have an impact on BiH market for production and sale of mineral fertilizers.

Petrokemija, in which the government holds 79.85%-stake, is the main producer of mineral fertilizer in the country with annual turnover of some HRK 2bn. Recall that INA expresses interest in Petrokemija’s recapitalization, in which it is to participate along with the PPD, one of Petrokemija’s creditors. INA said that it was willing to participate in Petrokemija’s recapitalization with HRK150m, and, according to earlier media reports, PPD is also to participate with HRK150m as well, via a joint venture. According to the media, when the government completes the process of taking over Petrokemija debts and the recapitalization plan is finalized, PPD and INA, through the joint venture, will have at least 55%-stake in Petrokemija. The objective of the recapitalization is to raise funds for investments that ensure and improve the production, restructuring and financing of the current business. In late May the government decided to buy HRK450m worth of banks’ claims against Petrokemija.

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