Chemical groups ZA Tarnow and ZA Pulawy signed an agreement defining terms of cooperation and negotiations leading to consolidation of the two entities under the name of Grupa Azoty, both companies said in separate market filings.

The parties agreed that once Tarnow's D-series share issue is completed, both managements will recommend appointing the same number of management board members (two or three) to the management of the consolidated entity, the filings read.

Grupa Azoty will strive to enter large-cap inex WIG20, assuring shareholders one of the highest rates of return on capital in the sector and maintaining the leading position on the European fertilizer market, the companies said.

On September 12 Tarnow's management approved an issue of up to 42.867 mln D-series shares, to be offered to Pulawy shareholders in a share swap.

Tarnow is planning to offer 2.5 own shares for each share of Pulawy, as the company seeks to increase its stake from the current level of just over 10% to 100%.