The company is one of Gazprom’s closest partners in the West. In addition, Wintershall produces oil in Russia.
(Photo: AP)
Dusseldorf, Frankfurt The Ludwigshafen chemical group BASF is considering splitting up the oil and gas producer Wintershall Dea in order to be able to list the subsidiary on the stock exchange in the medium term. Accordingly, investment bankers should explore the possibilities of selling the Russian activities to the joint venture partner Letter One, led by the Russian oligarch Mikhail Fridman, according to company and industry circles. The Bloomberg news agency first reported on the plans.
With a good 72 percent, BASF holds the majority in Wintershall Dea, the rest is held by Letter One. The Ludwigshafen-based company has long had plans to list the joint venture on the stock exchange, but the Russian partners have always put the brakes on it. However, with the start of the Ukraine war and the sanctions against Russia, an IPO has become practically impossible.
The reason is Wintershall Dea’s strong position in Russia: The company is one of Gazprom’s closest partners in the West. In Siberia, both groups produce gas with a joint venture, and Wintershall also produces oil in Russia.
One way out would be to separate these activities from Wintershall and make a company focused on the rest of the business ready for the stock market. But this plan has its pitfalls, because even a sale of activities and assets in Russia is hardly feasible under the given circumstances.
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Even for the logical buyer, Letter One, such a purchase might not be in the strategic interest. It is unlikely that L1 shareholders will agree to take over the Russian business now and thus get closer to the Russian government.
In Siberia, both groups produce gas with a joint venture.
(Photo: dpa)
It has been known since the beginning of March that the oligarch Fridman is on the European Union’s sanctions list and has thus officially relinquished leadership of Letter One. However, Fridman has positioned himself against the war and wants to distance himself from Moscow. The oligarch German Khan, who until recently sat on the Wintershall supervisory board and on the Letter One board, is also on the sanctions list.
BASF doesn’t want to wait forever before separating from Wintershall
To date, the Letter One company as a whole has not been sanctioned. But as a precaution, Wintershall stopped all payments to Letter One. The shareholder would therefore have more incentive to distance itself further from the Russian government than to take over large oil and gas fields in Russia.
Given the current oil prices, analysts theoretically estimate the current value of BASF’s stake in Wintershall Dea at a good 20 billion euros. But because the assets in Russia realistically have to be valued at zero, the value of the rest would only make up a third of this amount, calculates Baader Bank.
It is unclear when an IPO could take place – although Wintershall is technically already ready for an IPO, as CEO Mario Mehren said last week when presenting the quarterly figures. Wintershall is now a stock corporation and has created the legal prerequisites for an IPO.
But the Russian business makes the company less attractive. In financial circles, an IPO this year is considered rather unrealistic. Without the Russian activities, on the other hand, Wintershall could attract investors in Europe as an oil and gas company that complies with ESG sustainability criteria, write the analysts at Baader Bank.
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At BASF and Wintershall there are now several options: They can write off the Russian business completely or at least try to generate income at all with a sale to Letter One – even if BASF is only likely to get a small price. The third option would be to wait and see whether Wintershall’s assets in Russia will ever regain a new value.
In view of the break with Russia, however, that is not at all foreseeable. In addition, BASF does not want to wait forever before separating from Wintershall. The group needs the revenue in the coming years for billions of dollars in investments in the green transformation, in China business and in the production of battery chemicals.
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