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In Largest Energy M&A Deal in Three Years, Rosneft Pays $56B for Russian Oil Co.

TNK-BP was formed with BP’s Russian oil and gas assets, and those of Alfa Group, Access Industries and Renova

Rosneft, a Russian state-owned oil company, will buy Russian oil company TNK-BP for $56 billion, making it one of the largest energy M&A transactions in more than three years.  

Alfa Group, Access Industries and Renova’s stake in TNK-BP is valued at $28 billion.

TNK-BP was formed through the merger of BP’s Russian oil and gas assets with those of Alfa Group, Access Industries and Renova. Those three Russian companies came together in 2003 and bought 50 percent of TNK-BP.

BP announced it would sell off its half of TNK-BP on Nov. 22 to Rosneft for $17.1 billion in cash, plus shares representing a 12.84 percent stake in Rosneft. BP plans to use $4.8 billion of the cash proceeds to purchase an additional 5.66 percent stake in Rosneft from the Russian government. The shares were valued at about $10.86 billion when the deal was announced.

The Russian government owns 75.16 percent of Rosneft. The company explores and produces oil from western Siberia, southern and central Russia, eastern Siberia and the Far East, and is also involved in projects in Kazakhstan and Algeria.

The transaction is subject to Russian and European antimonopoly regulatory approvals.

Skadden Arps Slate Meagher & Flom LLP represented Alfa-Access-Renova on the deal.

The acquisition was announced just days after another megadeal in the energy sector. Canadian oil and gas producer Nexen Inc. approved a $15.1 billion purchase offer from Chinese state-owned oil giant CNOOC Ltd. on Dec.  8.

Other recent energy deals include Spectra Energy’s $1.49 billion purchase of the Express-Platte Pipeline System, Freeport-McMoRan Copper & Gold Inc.’s (NYSE: FCX) acquisition of Plains Exploration & Production Co. (NYSE: PXP) and McMoRan Exploration Co. (NYSE: MMR) and Plains All American Pipeline LP’s (NYSE: PAA) decision to buy four crude oil rail terminals. 

For more on energy M&A, see “Fracking Fuels Energy Deals.” 

 

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