Europe: BP's Russian deal inflates M&A total

Global Finance, Apr 2003 by Platt, Gordon

Europe passed the Americas in total mergers and acquisitions in February, led by BP's landmark deal to merge its Russian assets with those of Alfa Group and Access-Renova in a joint venture agreement valued at $8 billion.

Europe had a total of $27.6 billion of mergers and acquisitions in the month, against $21.6 billion for the Americas, according to New Yorkbased Thomson Financial.

Tyumen Oil, owned by Alfa and Access-Renova, will be the main production unit of the giant new Russian oil company. London-based BP was to invest $1.25 billion of assets, including its minority stake in Sidanco. BP also agreed to pay $3 billion in cash as well as make three additional annual payments of $1.25 billion each, payable in newly issued shares, for a 50% stake in the new company.

The deal will create Russia's third-largest oil company after Lukoil and Yukos. The new company will have output of about 1.2 million barrels of oil a day.The Russian partners will appoint the chairman, and BP will name the chief executive.

BP's investment equals all of the foreign direct investment in Russia for the past three years combined.

-Gordon Platt