CORRECTED-UPDATE 1-Poland to merge its two major refiners PKN and Lotos, shares up

(Corrects headline to read Lotos)

WARSAW, Feb 27 (Reuters) - Poland’s government plans to merge the country’s two biggest refiners PKN Orlen and Grupa Lotos in a bid to create a bigger player capable of competing on international markets, PKN said on Tuesday.

The decision follows a string of transactions in which state-run firms and institutions took over foreign assets put up for sale in Poland, including banks and energy companies, amid talk of a merger between Poland’s two biggest state-run banks.

PKN Orlen, with market capitalisation of around 40 billion zlotys, said it signed a letter of intent on Tuesday to buy from the state at least 53 percent of shares in Lotos, a company with a total market value of 10 billion zlotys as of Monday’s close.

“The aim of the transaction is to create a strong, integrated corporation capable of competing better in an international dimension, resistant to market fluctuations,” PKN said in a statement.

Energy Minister Krzysztof Tchorzewski was quoted by daily Dziennik Gazeta Prawna earlier this month as saying a merger between Lotos and PKN Orlen would not be a bad idea. PKN said on Tuesday it would take a year to complete the transaction.

By 1141 GMT shares in PKN and Lotos had risen by around 6 percent each. (Reporting by Marcin Goclowski and Pawel Florkiewicz; Editing by Lidia Kelly)