Russia Approves Yukos-Sibneft Oil Merger
MARA D. BELLABY
Aug. 14, 2003
MOSCOW (AP) _ The Russian Anti-Monopoly Ministry on Thursday approved Yukos oil company's merger with its smaller rival Sibneft, a move that will create the world's fourth-largest oil producer.
The approval comes four months after the deal was announced. It also comes amid a wide-ranging probe into Yukos seen as part of a politically motivated campaign against the company.
The probe had raised concerns that the merger plans might be derailed. Only on Wednesday, Interfax quoted Russia's minister for anti-monopoly policy, Ilya Yuzhanov, as denying that approval for the merger was imminent, contradicting earlier statements.
After business hours Thursday, the ministry released a statement confirming ``the conclusion of its agreement to the merger of Yukos and Sibneft.''
It noted that the merger must be finished by the end of the year, and mentioned ``the ordering of accompanying conditions.'' The statement, however, didn't elaborate and ministry officials could not be reached to comment. ITAR-Tass and Interfax news agencies said the conditions primarily put some limits on the new company's ability to muscle out smaller competitors.
The official investigation of Yukos began with the July 2 arrest of Platon Lebedev, one of the company's top shareholders, on suspicion of defrauding the state in a 1994 privatization deal and tax evasion. The probe has included an archive search and investigations into what prosecutors say are the killings and attempted killings of officials and businessmen who had conflicts with Yukos.
Yukos chief executive Mikhail Khodorkovsky, who is also the company's largest shareholder, has said he believes infighting in President Vladimir Putin's administration is behind the probe. Many observers claim that the probe is politically motivated and a warning to Khodorkovsky to stay out of politics.
The investigations have made Russian and foreign investors nervous, hurt the country's stock market and stoked fears that controversial privatization deals of the 1990s could be annulled. Some critics also saw the probe as a reaction to the planned Yukos-Sibneft merger.
The merger is the largest in Russian corporate history, creating a company with a market capitalization of some $36 billion.
``We hope that it will enter the league, I would say, of the very few leading international companies in terms of efficiency, profits and everything else,'' said Alexander Korsik, Sibneft's vice-president, in an interview with Associated Press Television News.
Under the deal, Yukos will pay $3 billion in cash for an initial 20 percent stake in Sibneft, and acquire the rest by exchanging Sibneft shares for shares in the newly formed company.
Khodorkovsky is expected to be CEO of the new company, to be named YukosSibneft Oil Co. Sibneft president Eugene Shvidler will be chairman. With daily oil output expected at 2.06 million barrels, the new company will be the world's fourth-largest oil producer, behind only BP, ExxonMobil and Royal Dutch Shell. It will have total reserves of around 19.4 billion barrels of oil equivalent.
Korsik said the merger should help the entire Russian economy.
``My feeling is that the Anti-Monopoly Committee approved the merger because they were sure it is in the best interest of the country,'' he said, adding that the company's ``joint potential can contribute to Russian economic growth.