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ELPE, Petrola merge

Hellenic Petroleum (ELPE), the state-owned oil refiner, is to merge with Petrola, owned by the private Latsis group, the government and Petrola said yesterday. The State will sell a 16.65 percent stake (or 43,500,000 shares) in ELPE to Paneuropean Oil and Industrial Holdings S., which owns Petrola, for 7.50 euros a share, or a total of 326 million euros. This is a 29.3 percent premium on ELPE's closing price yesterday and 41.5 percent on the past six months' average. ELPE and Petrola will immediately begin to merge, on the basis of one share in ELPE being equal to 5.36 in Petrola. «It is expected that when the merger is complete, the Latsis group will hold about 25 percent of Hellenic Petroleum,» the ministries of national economy and development said in a joint statement. The company's board will grow from the current 11 to 13 members, with the State appointing seven. Paneuropean, employees and minority shareholders will have the right to appoint two members each. «The agreement between the State and the investor foresees that the State will maintain control of ELPE's management. Furthermore, the investor and State have a mutual right of preference in certain cases of share distribution outside of public listing or book building to institutional investors,» Petrola said. «The size of the company that will result from the merger will significantly strengthen its potential for further development of its international activities,» it said. ELPE employees promised to take action to stop the merger. The resulting company will have a total turnover of 3.905 billion euros and pretax profits of 134 million euros, with assets of 1.613 billion euros on the basis of 2002 figures. It will control nearly 80 percent of the market, as ELPE holds 58 percent and Petrola 20 percent. The announcement caused a storm yesterday, with the opposition New Democracy party claiming that instead of privatizing one company it was nationalizing another. Vardis Vardinoyiannis, chairman of Motor Oil, which controls 22 percent of the Greek market, demanded: «Do we or do we not have a government? A monopoly is being created and this should concern the opposition as well.» In February, Greece canceled an effort to sell 23.5 percent of ELPE to the Latsis group and Russia's Lukoil.

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