Gazprom Units Set Merger Terms to Create Russia’s No. 3 Utility

OAO Gazprom’s OAO OGK-2 and OAO OGK-6 power utilities announced the terms of their merger, set to create Russia’s third-largest electricity generator.

One share in OGK-2 is weighted at 1.2141 shares of OGK-6 for the transaction, OGK-2 said today in a presentation on its website. The buyout price for OGK-2 shareholders who don’t want to participate in the share swap was set at 1.72 rubles each and OGK-6 shares at 1.40 rubles, it said.

The combined company will produce about 8 percent of Russia’s electricity, and have the third-largest installed capacity behind OAO RusHydro, the country’s biggest hydro generator, and OAO Rosenergoatom, which runs nuclear power plants, according to the presentation.

OGK-2, which will continue to trade in Moscow after the merger, will issue 26.6 billion shares for the exchange, the Moscow-based wholesale generator said. That is more than 80 percent of its current shares outstanding.

Gazprom, the world’s biggest natural-gas producer, will control 58.8 percent of the combined utility before buying back shares from dissenting minority shareholders, according to the presentation. OGK-2 minority shareholders may hold as much as 23.6 percent, and OGK-6 minority shareholders may have 17.7 percent.

The transaction, which must still gain shareholder and antitrust approval, may be completed by Oct. 1, OGK-2 said. JPMorgan Chase & Co. and Bank of America Merrill Lynch are the financial advisers for the deal.

OGK-2 global depositary receipts will be delisted from the London Stock Exchange and the utility will need to apply for readmission to trading, the utility said April 21. Gazprom will decide this summer whether to renew the foreign listing, Interfax reported, citing Denis Fedorov, the head of Gazprom Energoholding.

OGK-2’s board recommended paying dividends of 0.48759 kopeks a share for last year, while OGK-6’s board may pay 0.439874 kopeks, the utilities said today in separate statements.

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

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