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PKN's Unipetrol eyes two „major” purchases, CEO says

Unipetrol AS, the largest Czech oil company, is considering two „major” acquisitions in addition to efforts to buy a refinery stake from ConocoPhillips, CEO Francois Vleugels said.

Unipetrol, controlled by Poland's PKN Orlen SA, is pursuing purchases in its key areas of refining, petrochemicals and car fuel sales, Vleugels said in an interview at company headquarters in Prague. The company also wants to increase a 51% holding in refiner Ceska Rafinerska AS by buying shares offered by ConocoPhillips. „Besides Ceska Rafinerska, there are two major opportunities,” Vleugels said. „One of them could happen this year for sure. The other one, unfortunately the larger one, could be this year or next year.” Vleugels was hired by PKN a year ago to reorganize Unipetrol's business, which ranges from refining and gasoline sales to fertilizer production. Under Vleugels, the company has invested in petrochemical production and refining, and has shed unrelated businesses, including PVC maker Spolana AS and rubber producer Kaucuk AS. The company is upgrading another unit, gas-station chain Benzina AS, the largest in the country. Vleugels declined to provide details of the potential acquisitions. The company has about 20 billion koruna ($924 million) in cash and its debt is less than 20% of equity. Vleugels was president for Europe, the Middle East and Africa of Eastman Chemical Co. as the company bought Czech chemical company Chemicke Zavody Sokolov AS in 1999. Before he became Unipetrol's leader in February 2006, Vleugels was deputy CEO for logistics at Hexion Speciality Chemicals Inc.

If Unipetrol fails to make acquisitions, it may consider paying dividends to shareholders or buying back shares, Vleugels said. The management team may discuss the dividend or a buyback plan as early as the fourth quarter this year, he said. „Good ideas do not always result in an opportunity,” he said. „If we decide we have no opportunities, we have to respect shareholders and we need to create value for them. One way is a dividend; the other is a share buyback.” Unipetrol's revenue in the first nine months of last year rose 7.9% to 71.8 billion koruna. Profit rose 27.6% to 2.9 billion koruna, according to data on the company Web site. Unipetrol plans to invest about 5.5 billion koruna this year in its current businesses. OAO Lukoil, Russia's largest oil producer, has said it wants to buy the 16.3% ConocoPhillips stake in Ceska Rafinerska that Unipetrol seeks. Unipetrol, Eni SpA and Royal Dutch Shell Plc, all of whom have stakes in the refiner, have the right of first refusal. Eni and Shell each hold 16.3%. Lukoil will inspect the refinery's books, probably starting in March, Vleugels said. Rafinerska will then do a valuation the other shareholders will use as guidance. (Bloomberg)