LetterOne, BASF in talks to merge oil & gas businesses

Russian billionaire Mikhail Fridman’s LetterOne and Germany’s BASF have signed a letter of intent to merge their oil and gas businesses into a joint venture named Wintershall DEA.

The oil and gas business of BASF is bundled in the Wintershall Group consisting of Wintershall Holding GmbH and its subsidiaries, including the gas transportation business. The oil and gas business of LetterOne comprises DEA Deutsche Erdöl AG and its subsidiaries.

“Wintershall DEA would have significant growth potential and be one of the largest independent European exploration and production companies,” BASF said.

Wintershall DEA’s Chief Executive Officer will be determined by BASF, with the Deputy Chief Executive Officer being determined by L1 Energy. The company shall be headquartered jointly in Hamburg and Kassel.

Lord Browne, the Executive Chairman of L1 Energy and Chairman of the Supervisory Board of DEA, said: “Wintershall DEA will be one of Europe’s largest independent E&P Companies, with the scale needed to generate sustainable growth long into the future. We look forward to creating jointly with BASF a new company, with activities in new places, new perspectives and new prospects for the future”

In the medium term, BASF and LetterOne envisage list Wintershall DEA through an initial public offering.

In the coming months, BASF and LetterOne will prepare and conduct a confirmatory due diligence and negotiate definitive transaction agreements. Closing could be expected in the second half of 2018.

Until the closing, Wintershall and DEA will continue to operate as independent companies. There is no assurance that BASF and LetterOne will be consummated.

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