BASF, LetterOne sign deal to merge Wintershall, DEA

Author: Al Greenwood


HOUSTON (ICIS)--BASF and LetterOne have signed an agreement to merge their oil-and-gas businesses to create a joint venture called Wintershall DEA, BASF and LetterOne said on Thursday.

The deal should close in the first half of 2019, pending approval of merger control, regulators and the German Federal Network Agency, BASF said.

Wintershall is the exploration-and-production business of BASF. DEA Group is owned by LetterOne, an investment vehicle of Russian magnate Mikhail Fridman.

The table below shows the 2017 financial performance of the combined Wintershall and DEA.

Sales €4.7bn
EBITDA €2.8bn
Net income €740m
Hydrocarbon output 210m bbl
Output/day 575,000 bbl

The joint venture plans to reach daily production of 750,000-800,000 bbl/day of oil equivalents by 2021-2023, BASF said. It plans to achieve synergies of at least €200m/year three years after the deal closes.

Wintershall CEO Mario Mehren will become the chairman of the management board and the CEO of the joint venture, BASF said. Maria Moraeus Hanssen, CEO of DEA, will become the deputy CEO and chief operating officer.

A chief financial officer still needs to be chosen, BASF said.

BASF will initially hold a 67% stake in the joint venture, with LetterOne holding the rest, BASF said.

The chemical company will also receive additional preference shares to take into account the value of Wintershall's gas-transportation business, BASF said. These will be converted into ordinary shares no later than 36 months after the deal closes, if not before the initial public offering (IPO) of the joint venture. At that point, BASF's stake in Wintershall DEA will rise to 72.7%.


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