The merger of Wintershall and DEA will enrich Mikhail Fridman and Herman Khan

Russian oligarchs will receive up to 27.3% in a new large European oil and gas corporation worth up to 20 billion euros.
28.09.2018
Kommersant
Origin source
Concern BASF and LetterOne Mikhail Fridman and Herman Khan announced the completion of negotiations on the merger of their oil and gas business - Wintershall and DEA. BASF, as expected, will receive 67% of the combined company, then its share should grow to 72.7% due to the introduction of Wintershall's gas transportation assets into the combined business. The transaction is expected to be closed in the first half of 2019.

German oil and gas companies Wintershall and DEA have announced the completion of merger talks, according to a joint press release. As a result, a united company should be created, in which at the first stage 67% of the shares will be held by Wintershall's parent company, BASF holding, and the remaining 33% will belong to the owner of DEA, LetterOne (controlled by Alfa Group shareholders Mikhail Friedman and German Khan). In the future, the share of BASF should be increased to 72.7% within 36 months of the merger due to the introduction of Wintershall's gas transportation assets into the combined company, which will not be included in the transaction at the first stage. First of all, we are talking about the joint company Wintershall and Gazprom Gascade, which, among other things, is the operator of the Opal gas pipelines and should become the operator of the future Eugal gas pipeline - continuations of the Nord Stream gas pipeline in Germany. In addition, Wintershall has a 15.5% share in the Nord Stream gas pipeline.

The merger will result in the creation of the largest independent (ie, Shell, Total, Eni and BP) major European oil and gas company with reserves of about 2.2 billion barrels of oil equivalent (1P each). The revenue of the combined company in 2017 could reach € 4.7 billion, EBITDA - € 2.8 billion, production - 575 thousand barrels of oil equivalent per day, of which 70% is gas. Companies plan to increase production after the merger to 750-800 thousand barrels per day in the early 2020s.

Due to the increase in the number of projects in which the company acts as an operator, a strong partnership and the optimization of its assets portfolio, Wintershall DEA will be able to successfully operate on the international market, "said Wintershall CEO Mario Meren.

In fact, this deal represents the creation of a joint German oil and gas company, as the DEA was formed in 2015 on the basis of oil and gas assets of RWE, to which E.On's oil and gas assets were subsequently purchased. Wintershall and DEA have a good geography of mining assets: both have significant business in Norway and the North Sea, as well as in North Africa. Wintershall, in contrast to the DEA, also has a large business in Russia together with Gazprom - a share in the Yuzhno-Russkoye field, as well as 25% in the development project of unit 1, as well as units 4 and 5 of the Achimov deposits of the Urengoy field. Mario Meren, who should lead the combined company, said in an interview with Kommersant in June that after the completion of the merger, it is possible to enter new projects in Russia.

The completion of the merger transaction is expected in the first half of 2019 after receiving the necessary approvals from regulators, until that point, the companies will work independently. In the medium term, it is planned to bring a new company to IPO. German Khan in the summer estimated the value of the combined structure at € 20 billion.

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