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Rosneft and BP (BP) could reportedly announce a $25B+ deal tomorrow or Tuesday for the Russian...
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Sunday, October 21, 2012, 4:43 AM ETRosneft and BP (BP) could reportedly announce a $25B+ deal tomorrow or Tuesday for the Russian oil major to acquire the U.K. company's 50% stake in TNK-BP. The sides are still hammering out the details, but it could involve a two-step process in which BP will receive a Rosneft stake of 16%-20% and and $10B-$13B in cash. BP could also get seats on Rosneft's board. (previous)
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According to UK Telegraph's
JONATHAN RUSSELL
ASSISTANT CITY EDITOR
" BP's board has backed the deal. Its shareholders may not be so positive. They are calling for a cash payout to compensate for the fact the new structure will see investor returns from Russia fall dramatically. More details of the deal need to be thrashed out, not least the political ones of such a huge deal taking place with the state-owned Rosneft."
This morning analysts were already suggesting BP could be jumping from the frying pan into the fire with the move. BP has put out a statement simply saying: "BP confirms it is in advanced discussions with Rosneft regarding the sale of its 50pc interest in TNK-BP. No agreements has yet been reached. A further announcement will be made if and when an agreement is reached."
The mergers and acquisitions market could be offered a shake-up under Takeover Panel plans to review the controversial "Cadbury Law". Complaints about the regulations have centred on the stifling effect of the 28-day deadline to complete deals, set by the rules.
The deal would give BP more cash to build their balance sheet. On the other hand Rosneft is still a highly government controlled company.