Russia’s Lukoil Stake Sold to ConocoPhillips for $1.988Bln
Created: 29.09.2004 13:21 MSK (GMT +3), Updated: 13:56 MSK, 34 minutes ago
MosNews
The Russian authorities have concluded the auction where the state’s 7.59 percent stake in Lukoil Oil Company was sold. Spring Holdings Ltd, which represented the interests of U.S. oil company ConocoPhillips.
Overall the authorities admitted three participants to the auction. As MosNews reported on Tuesday, September 28, four bids were submitted to the auction commission. However one of the bidders did not submit the relevant documents proving that it paid the security deposit of 450 million rubles ($15.4 million). As was forecasted the commission denied the bidder a right to participate in the auction. The bidders who were admitted to take part in the trading were Spring Holdings Ltd, commercial bank Promsvyazbank and closed joint-stock company Promregion Holding. The bidding was started by Promsvyazbank which offered the starting price of $1.928 billion for the stake. The second offer came from Promeregion Holding which suggested a price of $1.934 billion. Third offer in the size of $1.988 came from Spring Holdings Ltd and was declared a winner.
The results of the auction were predictable as ConocoPhillips was seen as the main contender for the state’s stake in Lukoil since July, when the company’s President along with Lukoil’s President Vagit Alekperov met with Russian President Vladimir Putin to discuss future investments. ConocoPhillips paid $60 million more than the starting price set by the government, and the price of one share amounted to $31.737. On Monday, September 27, Lukoil’s shares were trading for $31.57 per share in the Russian Trading System. Following the official announcement of the auction’s results the price of Lukoil shares traded on the Moscow Interbank Currency Exchange fell by 3.5 percent.
Following the auction ConocoPhillips released a press statement where the U.S. oil company announced that it plans to establish a joint venture with Lukoil to develop oil and gas deposits in Timano-Pechorsk province and to jointly participate in the West Qurna project in Iraq. ConocoPhillips also announced that it wants to increase its stake in Lukoil by another 2.4 percent and will offer the Russian oil company’s shareholders a chance to sell the relevant amount of shares for a price of $30.76 per share.
Following the auction Leonid Fedun, vice president of Lukoil, told reporters that the company’s management is satisfied with the results of the auction. “This is the largest privatization deal in the Russian Federation. It proved the company’s capitalization,” said Fedun. He also reiterated that the company’s management did not take part in the auction. Russia’s Deputy Economy Minister Andrei Sharonov also told reporters that his agency is satisfied with the results of the auction. Kirill Tomashchuk from the Federal Property Fund did note however, that his agency is somewhat upset that the $2 billion barrier wasn’t overcome in the process of the auction.
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