On 1 January 2023 the Group has closed the transaction to acquire a part of the business related to the production and marketing of LDPE from the Poland’s largest plastics manufacturer Basell Orlen Polyolefins sp z o.o. (a joint venture in which ORLEN and Lyondell Basell Industries each hold a 50% of shares) and Basell Orlen Polyolefins Sprzedaż sp. z o.o. (100% of shares held by Basell Orlen Polyolefins sp z o.o.). The business involves the production and marketing of LDPE, as well as customer service in the Polish market. The transaction was cleared by the Polish and Dutch antitrust regulators.
The acquired production capacity is 100 thousand tonnes per year, which means that ORLEN, as Poland’s only producer of LDPE, will single-handedly cover about a third of the country’s overall demand for the plastic.
Low density polyethylene (LDPE) is commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables. It is a fully recyclable product playing an important role in advancing the circular economy.
After the transaction, Basell Orlen Polyolefins sp. z o.o. will continue to develop the production and sale of HDPE polyethylene, i.e. high-density polyethylene, and polypropylene.
The acquisition of the part of the business related to the production and sale of LDPE is in line with the strategy implemented by the Group. The Group observes a dynamic increase in demand for petrochemical products on global markets, and according to forecasts, by 2030 the value of the petrochemicals and base plastics market is expected to double. Therefore, the Group aims to increase its share in this promising business and to strengthen its position as the leading producer of petrochemical products in Europe, which will enable it to increase its profits.
Provisional settlement of the transaction
The acquisition of the business related to the production and sale of LDPE is accounted for using the acquisition method in accordance with IFRS 3 Business Combinations.
As at the date of preparation of these consolidated financial statements, the accounting for the merger has not been completed, in particular the valuation process of measuring the acquired net assets to fair value is being finalised by external experts. Therefore, the Group presented provisional values of identifiable assets and liabilities which correspond to their fair values as at the merger date estimated on the basis of previous works carried out by external experts, which are currently being verified by the Group, and therefore may still change. The Group plans to make the final settlement of the purchase transaction within 12 months from the merger date.
The provisional value of identifiable assets acquired and liabilities assumed recognised as at the acquisition date are as follows:
