Rosneft offers lowball $1.5 billion for TNK-BP minorities

Mon Sep 30, 2013 11:43am EDT
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By Vladimir Soldatkin

MOSCOW (Reuters) - Oil group Rosneft (ROSN.MM: Quote) is to buy the remaining shares in TNK-BP Holding TNBP.MM for a fraction of the price it paid BP (BP.L: Quote) and a group of oligarchs for their stakes, in a worrying development for minority shareholders in Russian companies.

Rosneft bought the holding company and its parent TNK-BP last year in a $55 billion takeover that created the world's largest publicly traded oil company by output. Minority shareholders own about 5 percent of the unit, now renamed RN Holding.

The deal to buy them out for about $1.5 billion was announced by Rosneft on Monday, after months of tough talk and refusal to acquire the shares had sent jitters through the investor community and raised questions over corporate governance in Russia.

"It will leave a bad impression and raises concerns," said Chris Weafer, senior partner with consultancy Macro-Advisory.

"The next time a big state company is looking at an acquisition of a company, the investors will be immediately very wary of that situation. Minority investors will run ... rather than wait and see what will happen."

Rosneft said it planned to buy out holders of ordinary shares at 67 roubles ($2.07) per share and preferred shares at 55 roubles, the company said. In response, TNK-BP ordinary shares rose by almost 5 percent on Monday to 63.3 roubles, while Rosneft was down 1.27 percent.

But the offer disappointed some investors hoping to get closer to the $3.70 a share analysts calculated that oligarchs including Mikhail Fridman received at the time of the TNK-BP buyout. The other tycoons were German Khan, Viktor Vekselberg and Len Blavatnik.

"The offer is not that generous compared to the $3.70," said one shareholder who spoke on condition of anonymity, but did not comment on whether further steps would be taken.   Continued...

A logo of Russian state oil firm Rosneft is seen at its office in Moscow, October 18, 2012. REUTERS/Maxim Shemetov