Reuters: Mergers News: UPDATE 1-TNK-BP co-owner says open to offers - report

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UPDATE 1-TNK-BP co-owner says open to offers - report May 31st 2012, 07:22 Thu May 31, 2012 3:22am EDT MOSCOW May 31 (Reuters) - TNK-BP, British oil major BP's Russian joint venture that is embroiled in a shareholder dispute, may get a third investor, co-owner and former chief executive Mikhail Fridman was quoted on Thursday as saying. Fridman, one of the four Soviet-born tycoons who share control of the 50-50 venture via the AAR consortium, quit as chief executive on Monday, deepening a leadership crisis that has deprived the company of a functioning board. "Everything is possible and realistic. We are open to proposals," Fridman told the Kommersant business daily in an interview. "There are no concrete offers, but it (TNK-BP) may be interesting to many." Fridman declined to comment to Kommersant what he considers to be fair value for TNK-BP, which is worth $38.4 billion based on the current market price of its main listed unit, TNK-BP Holding. Bank of America Merrill Lynch, in a note dated May 29, assigned a value of TNK-BP International, a holding company that controls TNK-BP Holding and further assets including Slavneft and some Ukrainian assets, at $50 billion. "AAR might ask for a valuation of up to $55-$60 billion on TNK-BP Holding alone, taking the transaction (to buy out AAR) to $30-$35 billion," analysts led by Karen Kostanian wrote in the note. Fridman dismissed suggestions that his resignation was related to former Deputy Prime Minister Igor Sechin's appointment to run state oil firm Rosneft following Vladimir Putin's return to the presidency. Under Sechin, Rosneft is expected to become a platform to consolidate Russian industry assets. Deputy Prime Minister Arkady Dvorkovich said separately that Rosneft is interested in buying its smaller peer Zarubezhneft. BP and AAR have been at loggerheads since BP sought to reach an offshore exploration and $16 billion share-swap deal with Rosneft last year. AAR won a court order to block the agreement, and last May refused a $32 billion buyout offer from Rosneft and BP for its one-half interest in TNK-BP. Arbitration proceedings continue under UK law into whether the failed BP-Rosneft deal violated an exclusivity clause in the TNK-BP shareholder agreement, with further hearings expected to be held towards the end of this year. Responding to reports that Rosneft's interest in TNK-BP had revived, Fridman called the idea of a merger between the two "fantasy". He said TNK-BP's current shareholder structure "no longer serves the interests of each party", adding that only one - BP or AAR - should control Russia's No.3 crude producer. "There are a lot of different options. For example, BP becomes a minority shareholder and gradually leaves TNK-BP's capital ... We would also consider cutting our stake if part of it is to be converted into BP shares," Fridman said. He added that this process could take between five and seven years. BP has recouped its initial $7 billion investment in TNK-BP from 2003 many times over, but it has had a series of clashes with its local shareholders over corporate governance. Last week the TNK-BP board, lacking a quorum, postponed a dividend payout in a sign of a broadening rift between AAR and BP, which each received $3.75 billion in 2011 dividends from TNK-BP. Link this Share this Digg this Email Reprints

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