UPDATE 1-Poland's Tarnow okays share issue, to merge with Pulawy
(Adds details, quotes from Tarnow CEO)
* Merger to create Europe's No.3 nitrogen fertiliser maker
* Plan to fend off hostile bid from Russian Acron (Adds detail)
TARNOW, Poland, July 14 (Reuters) - Shareholders of Poland's state-controlled top chemicals maker Azoty Tarnow approved on Saturday a giant share issue to merge with state-owned rival Pulawy, setting up defences against takeover bids from private competitors.
Tarnow said the merger would create Europe's No.3 nitrogen fertiliser producer, with revenues exceeding 10 billion zlotys ($2.92 billion), at the same time protecting Tarnow from an unsolicited takeover bid from Russian rival Acron.
Led by Poland's treasury ministry, shareholders granted Tarnow the option to raise its capital by up to 75 percent by issuing new shares for the shareholders of Pulawy, which would receive 2.5 new Tarnow shares for each share of Pulawy.
The share issue, which is to take place in the next six months, comes after Tarnow launched on Friday a cash bid for 32 percent of Pulawy that also had become a target of a takeover bid from local rival Synthos.
The treasury ministry, which oversees state assets and holds 32 percent of Tarnow and 51 percent of Pulawy, said it was opposed to Acron's bid that ends on Monday, supporting Tarnow's planned merger with Pulawy instead.
Poland is seeking 15 billion zlotys from privatisations by the end of 2013, but the sale of state assets to Russian companies is a sensitive issue given historical tensions between the countries and Poland's dependence on Russian gas.
The motion to raise Tarnow capital was also backed by many of the financial investors in the company, which include pension fund ING OFE and state-controlled insurer PZU.
"I would like to thank the treasury and the funds, which have decided that our strategy (of a merger) will raise the company's value," Tarnow's chief executive Jerzy Marciniak told reporters after the vote.
"I understand that Acron will now drop its bid for Tarnow as it was premised on the expectations that shareholders would not take the decision to issue more shares." ($1 = 3.4268 Polish zlotys) (Reporting by Wojciech Zurawski; writing by Marcin Goettig; editing by Keiron Henderson)