"The transaction is another example proving that Polish firms, guided by purely business considerations and carefully watching the market, engage into what they perceive as attractive investment opportunities," said Aleksander Grad, Minister of the State Treasury.

"The acquisition of Vattenfall's Warsaw assets will help us diversify our revenue streams in line with the Group's updated strategy, according to which power generation is to be one of the three key areas of our development in the years ahead. Having regard to the interests of the Company and its shareholders, we are keen to continue to develop the power generation business within the PGNiG Group," said Michał Szubski, President of PGNiG's Management Board.

The takeover of VHP's assets, as well as the implementation of an investment programme aimed to expand the capacities of the capital city's CHP plants, will boost PGNiG's revenue driven by sales of heat and electricity, while having a positive effect on the Polish gas market.

Following the transaction, the PGNiG Group will gain a new member, widely regarded as a leader of the Polish power generation sector, combining high operational efficiency with a sound financial position and a team of well-qualified, experienced staff. PGNiG intends to leverage the expertise and skills of VHP's staff by turning the acquired company into a competence centre for its power generation business.

"In response to Warsaw's growing demand for electricity and heat, we are planning to build at least one more large capacity gas-fired CHP plant. Our plans to gradually switch over from old coal-based assets to modern CCGT units will certainly improve the quality of lives of the capital city's residents, while allowing us to better tailor the output to their needs. In addition to being highly efficient, gas-fired co-generation units produce some 50% less atmospheric emissions than coal-based energy sources," said Rafał Dudziński, Vice-President of PGNiG's Management Board, responsible for strategy.

In the Management Board's opinion, the takeover of VHP will significantly enhance the PGNiG Group's position as a major player on the Polish energy market, allowing it to claim a substantial share of the power generation segment. It will also have an added benefit of strengthening competition in the Polish energy sector.

The acquisition price as at the agreement date was close to PLN 2.96bn, which corresponds to the enterprise value of approximately PLN 3.5bn. The price will be adjusted to reflect the time value of money. The final acquisition price will depend on the date on which the transaction is ultimately closed. The investment will be fully financed with proceeds from PGNiG's note issue programme.

"We are very satisfied with the terms of the deal. The acquisition of Vattenfall's assets confirms the Management Board's determination in consistently pursuing the Company's current strategy to develop the key areas of its business. Moreover, we believe that the deal will help balance our overall risk exposure, by increasing our exposure to regulated areas of business, and thus will be well received by the financial markets," said Sławomir Hinc, Vice-President of PGNiG's Management Board, responsible for finance.

The closing of the transaction will be conditional upon obtaining a concentration clearance from the President of the Office for Competition and Consumer Protection (UOKiK).

The take-over of VHP by PGNiG will be one of the largest acquisitions ever in the Polish energy market.