BASF, the German chemicals group, has agreed to merge its Wintershall energy unit with rival DEA in a multibillion-euro deal to create one of Europe’s largest independent oil and gas producers.
DEA, also based in Germany, is owned by LetterOne, the investment vehicle of Russian billionaire Mikhail Fridman, and chaired by Lord Browne, the former chief executive of BP.
The merged entity, to be called Wintershall DEA, will initially be two-thirds owned by BASF and one-third by L1 Energy, with a plan to list the company through an initial public offering “in the medium term”.
Lord Browne, who oversees LetterOne’s energy investments, said the deal would give the combined businesses “the scale needed to generate sustainable growth long into the future”.
BASF and LetterOne said they signed a letter of intent on Thursday and aimed to close the transaction in the second half of next year. In 2016, DEA and Wintershall had combined revenues of about €4.5bn and earnings before interest, tax, amortisation and depreciation of €2.2bn, with production of about 600,000 barrels of oil and oil equivalent per day and reserves of 2bn barrels.
No valuation was given for the transaction but analysts have estimated it at about €12bn. Bankers said the enterprise value of the potential IPO could be as much as double that after synergies and growth opportunities were realised.
Source: FT.com
