(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
TARNOW, Poland, July 14 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)