The two shareholders of Wintershall Dea, Europe’s largest gas and oil exploration and production company, are in conflict over the subsidiary’s announced IPO. The German chemical group BASF wants to continue with the IPO, while investment fund LetterOne (of the Russian billionaire Mikhail Fridman) is vehemently opposed to this. That wrote the Financial Times last weekend.
The spat comes on top of concerns already surrounding Wintershall Dea over the conflict between Russia and the West. The company is one of the investors of the Nord Stream 2 gas pipeline between Russia and Germany. The gas pipeline is ready for use, but is under pressure due to Europe’s dependence on Russian gas.
In a statement to the FT, BASF said it is “completely committed” to divesting its share in Wintershall Dea and that an IPO is the best way to do so. However, LetterOne is not aware of this for the time being, and writes in a response that it will not be guided by and will oppose the “increasing pressure” to opt for an IPO at the moment. BASF owns two-thirds of the shares, the rest is held by LetterOne.
With an estimated company value of 20 billion euros, Wintershall Dea’s IPO could become one of the largest in Europe. The IPO has been planned for some time, but was postponed twice in March and June last year, partly due to unfavorable market conditions. An IPO would not be on the agenda until after 2021.
Rising tensions
According to LetterOne, an IPO of Wintershall Dea is currently damaging to the company because of tensions between Russia and the West. Investors are currently eschewing stocks related to Russia, where Wintershall Dea has some of its business. It also writes that the focus on the IPO and the subsequent issuance of dividends can lead to fewer investments, for example in mergers and acquisitions. Oil and gas reserves and their affordability for European countries could be at risk as a result. Only when the weather “makes commercial sense” will LetterOne support an IPO.
Wintershall Dea was created in 2019 after a merger of the more than 100-year-old German companies Wintershall and Deutsche Tiefbohr-Actiengesellschaft. However, the gas and oil producers have been collaborating a lot since the 1950s. The merged company conducts gas and oil exploration and production in thirteen countries across Europe, Latin America, the Middle East, North Africa and Russia. Last year, Wintershall Dea produced a total oil barrel equivalent of 623 mboe per day, of which 72 percent was gas. The gross profit amounted to 1.6 billion euros.