RUSSIA/U.K.: RUSSIAN OIL FIRM SIBNEFT SUSPENDS PLANNED MERGER WITH OIL GIANT YUKOS
Record ID:
344869
RUSSIA/U.K.: RUSSIAN OIL FIRM SIBNEFT SUSPENDS PLANNED MERGER WITH OIL GIANT YUKOS
- Title: RUSSIA/U.K.: RUSSIAN OIL FIRM SIBNEFT SUSPENDS PLANNED MERGER WITH OIL GIANT YUKOS
- Date: 28th November 2003
- Summary: (W4) NOYABIRSK, RUSSIA (FILE - NOVEMBER 11, 2003) (REUTERS) 1. SIBNEFT OIL DRILLING FACILITIES IN SNOW (2 SHOTS) 0.16 2. SLV/MV: TWO WORKERS INSIDE OIL DRILLING PLATFORM (2 SHOTS) 0.29 3. VARIOUS OF OIL DRILLING FACILITIES 0.34 4. SCU: SIBNEFT TRUCK 0.38 5. LV/SCU: GAS BURNING OFF IN SIBNEFT OIL FIELD (2 SHOTS) 0.54 6. SIBNEFT TRUCK DRIVING BY 1.02 (W4) MOSCOW, RUSSIA (FILE - NOVEMBER, 2003) (REUTERS) 7. PAN DOWN: EXTERIOR OF YUKOS HEADQUARTERS 1.10 8. CU: "YUKOS" SIGN OUTSIDE BUILDING 1.17 (W5) LONDON, UNITED KINGDOM (NOVEMBER 28, 2003) (REUTERS) 9. (SOUNDBITE) (English) WILLIAM KEMBLE-DIAZ, REUTERS MARKET ANALYST, SAYING: "There are no doubts about it, it has come as a complete shock. Today was expected to be the day when the deal was simply sealed. So the news that Sibneft has suspended the merger has come as a complete shock and predictably knocked shares - not just in Yukos itself but also the Russian market generally." 1.37 (W5) GRAPHICS (NOVEMBER 28, 2003) (REUTERS) 10. GRAPH SHOWING YUKOS SHARE PRICE DROPPING 1.44 11. GRAPH SHOWING SIBNEFT SHARE PRICE DROPPING 1.51 (W5) LONDON, UNITED KINGDOM (NOVEMBER 28, 2003) (REUTERS) 12. (SOUNDBITE) (English) KEMBLE-DIAZ SAYING: "At this early stage it's difficult to draw hard conclusions because we don't know the exact reasons behind this decision. It might be a temporary thing. We're expecting a statement from Yukos later today on its position on the merger. It might just simply be a question of documentation. It might be simply that the major shareholder in Sibneft, Roman Abramovich, is trying to sue for better terms, or it might be something a bit more sinister, which is simply that Sibneft has seen the political writing on the wall and is keen to get out." 2.27 (W4) MOSCOW, RUSSIA (FILE- APRIL 22, 2003) (REUTERS) 13. MIKHAIL KHODORKOVSKY THEN CHIEF OF YUKOS AND SIBNEFT CHIEF YEVGENY SHVIDLER SHAKING HANDS TO ANNOUNCE MERGER YUKOS-SIBNEFT 2.37 (W5) LONDON, UNITED KINGDOM (NOVEMBER 28, 2003) (REUTERS) 14. (SOUNDBITE) (English) KEMBLE-DIAZ SAYING: "Clearly, that was a landmark deal for the post-Soviet Russian business environment. It would have created - it will still if the deal goes through - the biggest commercial entity in Russia. And it creates question marks about the ability to do business in that country and go forward." 2.56 (W4) MOSCOW, RUSSIA (FILE - JULY 2003) (REUTERS) 15. FORMER YUKOS BOSS MIKHAIL KHODORKOVSKY WITH YOUNGSTERS AT YUKOS-SPONSORED YOUTH CAMP (2 SHOTS) 3.18 16. KHODORKOVSKY SPEAKING AT MEETING 3.26 (W5) LONDON, ENGLAND, UNITED KINGDOM (NOVEMBER 28, 2003) (REUTERS) 17. (SOUNDBITE) (English) KEMBLE-DIAZ SAYING: "I think the key issue here is the relationship between the political authorities and the ability to do business in the country. I think in the case of Yukos, clearly Khodorkovsky has made some very powerful political enemies. And that's not necessarily the case for all the other companies." 3.44 (W4) MOSCOW, RUSSIA (FILE - JULY 2003) (REUTERS) 18. MASKED POLICE AT OFFICES HOLDING YUKOS'S DOCUMENT ARCHIVES (2 SHOTS) 3.50 (W4) MOSCOW, RUSSIA (FILE - OCTOBER 25, 2003) (REUTERS) 19. POLICE VAN TAKING MIKHAIL KHODORKOVSKY TO JAIL IN MOSCOW 4.11 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 13th December 2003 12:00
- Keywords:
- Location: MOSCOW AND NOYABIRSK, RUSSIA; LONDON, UNITED KINGDOM
- City:
- Country: England United Kingdom Russia
- Reuters ID: LVAASF86EGQMP3214FN4V4ISR2SG
- Story Text: Russian oil firm Sibneft says it is suspending
a planned merger with oil giant YUKOS.
Russian oil firm Sibneft said it had suspended its
merger with partner YUKOS on Friday (November 28), freezing
an $11 billion landmark post-Soviet deal that has been
dogged by pre-election political controversy.
The company's announcement, which came without
explanation shortly after the start of a joint
shareholders' meeting to elect board members to the
newly-merged company, stunned financial markets in Moscow
and abroad, and sent YUKOS and Sibneft shares tumbling.
"There are no doubts about it, it has come as a complete
shock. Today was expected to be the day when the deal was
simply sealed. So the news that Sibneft has suspended the
merger has come as a complete shock and predictably knocked
shares - not just in Yukos itself but also the Russian
market generally," said Reuters market analyst William
Kemble-Diaz.
By 1124 GMT YUKOS shares were down five percent at
$11.40. Sibneft shares were off 3.7 percent at $2.35 after
falling as much as 11 percent earlier.
"The completion of a merger between YUKOS and Sibneft
is suspended due to a mutual agreement reached between the
core shareholders of both companies," Sibneft said in a
statement.
But a spokesman for YUKOS later said the statement was
not a joint statement, and YUKOS Chief Executive Simon
Kukes told the meeting that management would continue work
on the merger. He said there would be a statement later in
the day on the Sibneft move.
Sibneft gave no further explanation for the suspension
of the deal, in which a majority stake in Sibneft has
already passed to YUKOS's main shareholders in exchange for
shares plus $3 billion in cash.
But some analysts said they suspected Roman Abramovich,
the oil tycoon who recently bought English soccer club
Chelsea and is a big Sibneft shareholder, wants to
renegotiate the deal.
"At this early stage it's difficult to draw hard conclusions
because we don't know the exact reasons behind
this decision. It might be a temporary thing. We're
expecting a statement from Yukos later today on its
position on the merger. It might just simply be a question
of documentation. It might be simply that the major
shareholder in Sibneft, Roman Abramovich, is trying to sue
for better terms, or it might be something a bit more
sinister, which is simply that Sibneft has seen the
political writing on the wall and is keen to get out," said
Kemble-Diaz.
Last month YUKOS's main shareholder and then chief
executive Mikhail Khodorkovsky was arrested on charges of
tax evasion and fraud. He remains in jail and has quit his
post.
Khodorkovsky was supporting opposition parties ahead of
upcoming Russian presidential and legislative elections.
President Vladimir Putin's crackdown on him and other
wealthy businessmen who emerged in the privatisation era of
the 1990's has proved popular with the Russian electorate.
The merger deal, effectively a takeover of Sibneft by
larger YUKOS, was to have created the world's fourth
largest oil company and by far Russia's biggest private
company.
"Clearly, that was a landmark deal for the post-Soviet
Russian business environment. It would have created - it
will still if the deal goes through - the biggest
commercial entity in Russia. And it creates question marks
about the ability to do business in that country and go
forward," said Kemble-Diaz.
Shares in both firms are still listed and still trading
because minority shareholders have yet to be made
an offer. Friday's meeting was called to approve a $2
billion YUKOS dividend. The meeting went ahead and the
payout was approved.
Asked if if the suspension of the merger would have
implications on foreign investment plans into the Russian
oil sector, Willian Kemble-Diaz said, "I think the key
issue here is the relationship between the political
authorities and the ability to do business in the country.
I think in the case of Yukos, clearly Khodorkovsky has made
some very powerful political enemies. And that's not
necessarily the case for all the other companies."
A Russian broker in London said suspension of the deal
could open the way for western oil firms already eager to
exploit Russia's energy riches to step in. U.S. giant Exxon
Mobil was holding talks with Yukos about buying a state
when Khodorkovsky was arrested.
That arrest spread panic among financial markets, who
feared that the government was launching a broadside
against big business that could lead to controversial
privatisations conducted in the 1990s being revoked.
Relative calm appeared to have been restored in recent
weeks after President Vladimir Putin reassured investors
that other companies would not be drawn into the
investigation into YUKOS's affairs.
But public prosecutors, who said on Wednesday they
completed their investigation into Khodorkovsky, have kept
up relentless pressure on YUKOS, searching the company's
offices earlier this week and seizing documents.
The OECD said in a toughly-worded report on Thursday
(November 27) that the YUKOS affair could hit Russia's
economic growth next year and may have a lasting impact on
business confidence.
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