Germany’s chemicals company BASF said on November 24, 2017, that it was in talks to potentially merge its oil and gas business, Wintershall Group, with the oil and gas operations of the LetterOne holding group, owned by Russian billionaire Mikhail Fridman.
If talks are successful and the parties reach an agreement, BASF would hold the majority of the shares in the joint enterprise, while LetterOne’s oil and gas business DEA Group will hold the remainder.
Launching an Initial Public Offering (IPO) of the joint enterprise would be an option in the medium term, BASF said, but noted that discussions were ongoing and there was no certainty that the parties would reach a deal on a transaction.
Talks between Wintershall and Fridman’s DEA Group are at an advanced stage, and the resulting company could be valued at more than $11.856 billion (10 billion euro), people familiar with the talks told Bloomberg.
Wintershall - which operates in exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America, and the Middle East and in transport of natural gas in Europe - generated net sales of some $3.32 billion (2.8 billion euro), and earnings before interest and tax (EBIT) of $593 million (500 million euro).
Patrick Lambert at brokerage Raymond James values Wintershall at some $11.86 billion-14.23 billion (10-12 billion euro).
«BASF’s exposure to oil and gas has failed to deliver the expected hedge for its chemical’s portfolio, and has led to increased volatility in terms of its cash flow generation,» Lambert told Reuters.
Via LetterOne, Russian tycoon Fridman bought DEA from Germany’s RWE in 2015 at an enterprise value of $6.05 billion (5.1 billion euro).
Mikhail Fridman - who has made his fortune in oil, banking, and telecoms - has a net worth of $15 billion. He is on the 75th place on Forbes 2017 World’s Billionaires list and № 7 among the wealthiest Russian businessmen.