The Czech cabinet agreed to sell the country's biggest downstream oil group Uni-petrol to Polish refiner PKN Orlen for $480 million, a Finance Ministry spokesman said yesterday.

PKN offered 11.3 billion crowns ($414 million) for a 63 per cent stake, or 98.9 crowns per share. The rest is for a chunk of Uni-petrol's debt to the state.

The approval was no surprise after a steering committee hailed the offer on Monday. PKN bid a higher-than-expected price per share despite being the sole bidder after Hungary's MOL and Shell withdrew.

PKN has teamed up with US oil firm ConocoPhillips and Czech chemicals maker Agrofert in the tender. PKN is keen to acquire Unipetrol's refining unit, Ceska Rafinerska, which penetrates southern parts of Poland.

The buyer is obliged to make an offer to buy out minority shareholders, which is expected in the autumn.

Analysts expect PKN to offer 84 crowns per share in the buyout, six per cent above Tuesday's close. Trading in Unipetrol shares was halted for yesterday.

Unipetrol holds the country's biggest refinery, controls production of petrochemicals and owns the top fuel retailer.

It posted net profit of 148 million crowns on sales of 68.7 billion crowns last year. Investors will also assume debt of 40.98 billion, partly callable after Uni-petrol's sale.

The government, which was advised by McKinsey, WestLB and EEIP, was reoffering the company after an initial sale attempt in 2002 failed when the then winner, now PKN's partner Agrofert, failed to pay 361 million euros ($426.3 million) it had promised.

The government approved the sale "under conditions submitted to the government by the sale committee,'' Nemecek said.

PKN's offer was backed by Agrofert AS, a Czech fertilizer maker, and ConocoPhillips, the largest US oil refiner.

The three companies are all interested in different Unipetrol assets.

Unipetrol shares rose 15 per cent to 79.24 crowns yesterday, valuing the company at 14.3 billion crowns.