E.ON AG agreed to sell its 3.5 percent stake in OAO Gazprom, the world’s biggest gas producer, for 3.4 billion euros ($4.5 billion) to cut debt.
Russia’s state development bank VEB will buy 2.7 percent, the rest has been sold on the open market. The sale will help E.ON to raise 15 billion euros in asset sales by the end of 2013, Chief Executive Officer Johannes Teyssen said today in a statement on the company’s website.
E.ON, Germany’s biggest utility, plans to maintain its partnership with Gazprom and projects in Russia as it raises funds to pay debt and make new strategic investments. The minority stake was “non-strategic,” Teyssen said last month.
“E.ON and Gazprom have close commercial ties, a friendship, this is not ending,” Theo Kitz, an analyst with Munich-based Merck Finck & Co., said by phone. “It will be a big step toward E.ON’s goal to sell assets.”
E.ON will book a gain of about 2.5 billion euros from the gain, according to the statement.
Gazprom shares rose 4.7 percent to close at 182.67 rubles in Moscow, the highest price since April 15. That values the company at $137 billion.
Positive for Gazprom
“Everyone was concerned that the shares will be sold on the open market,” Alex Fak, an analyst at Troika Dialog in Moscow, said by phone. “The fact that 2.7 percent was sold to VEB is positive for Gazprom stock.”
E.ON shares rose 1.5 percent to close at 22.43 euros in Frankfurt, the biggest advance since Nov. 18.
The agreement is signed, VEB chief Vladimir Dmitriev, told reporters in Moscow, declining to comment on the price. E.ON will transfer the stake and receive the payment this month, the German utility said.
E.ON’s Ruhrgas unit reduced its stake to 3.5 percent from about 6.5 percent last year in exchange for a stake of 25 percent minus three shares in a Gazprom unit developing the Yuzhno-Russkoye gas field in western Siberia. Ruhrgas became the first Western company to take a direct stake in Gazprom when it acquired 2.5 percent in 1998, according to its website.
E.ON in Russia
“The sale of our Gazprom stake does not alter our Russia strategy,” Teyssen said. “E.ON will remain an active investor in Russia in both power and gas.”
Besides working with Gazprom in Yuzhno-Russkoye, E.ON Ruhrgas holds 15.5 percent of the Nord Stream venture that is building a gas pipeline from Russia to Germany across the Baltic Sea, and E.ON controls the OGK-4 power utility in Russia. Burckhard Bergmann, former CEO of E.ON Ruhrgas, has been on Gazprom’s board since 2000.
“I am sure we will continue our successful cooperation after E.ON exits as a shareholder,” Sergei Kupriyanov, a Gazprom spokesman, said today by telephone. “We started a number of joint projects in gas production and transportation, in which we will remain partners.”
E.ON Ruhrgas imports most of its gas from Gazprom, while the utility is developing a profitable power generation business in Russia, Kitz said.
E.ON, which has its headquarters in Dusseldorf, is looking at expansion outside of Europe, where utilities face stagnant demand and levies from governments that want to plug deficits.