Analyst Research Report Snapshot

Title:

ATON EQUITY RESEARCH. ROSNEFT + TNK-BP - The Deal of the Century

Price:

$92.00

Provider:

ATON LLC

Date:

29 Oct 2012

Pages:

10

Type:

AcrobatPDF

Companies referenced:

TNBP.MM ROSN.MM

Available for Immediate Download
Summary:

Deal terms are relatively fair. On 22 Oct, Rosneft released the details of its preliminary agreements with BP and AAR on the acquisition of 100% of TNK-BP (50% from each company). The deal with BP calls for the payment of $17.1bn in cash and 12.84% of Rosneft shares. In addition, BP has committed to spending $4.8bn of the cash received to buy 5.66% of Rosneft’s shares from Rosneftegas (at $8.0/share, just 10% and 2% below our and consensus’ estimates of the company’s fair price, respectively). We estimate the implied value of TNK-BP Holding’s shares at $3.6/ordinary share and $3.1/preferred share, which differs very little from our and consensus estimates of the latter’s fair value. Rosneft benefits materially from the deal. Following the acquisition of TNK-BP Ltd, Rosneft will become the largest oil company in the world with proved reserves of 26.7bn boe and 4.71mn boepd of hydrocarbon production. The company is buying first-class assets at a fair price, in our view, and receiving a strategic partner for its business. Rosneft estimates the synergy effect from the deal at $3-5bn. TNK-BP Holding’s shares – cheap entry into Rosneft. We believe that Rosneft will at some stage offer TNK-BP Holding’s minority shareholders a swap into Rosneft shares:  The exchange ratio for the swap is unlikely, in our opinion, to be worse than the current 3.5 TNBP shares for one Rosneft share  If the swap happens imminently, we believe the average six-month price and the deal price are likely to be used as the valuation benchmarks by an independent appraiser  If the swap takes place at a later stage, our view is that minorities should have the opportunity to receive dividends from the company before its integration into Rosneft ELENA SAVCHIK +7 495 213 0343 Elena.Savchik@aton.ru SLAVA BUNKOV +7495 213 0344 Slava.Bunkov@aton.ru ANNA LAKEYCHUK +7 495 777 9090 ext. 2661 Anna.Lakeychuk@aton.ru

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