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TNK-BP Shares Rise to Three-Month High on BP Buyout Report

TNK-BP Shares Rises to Three-Month High on BP Buyout Report
BP may make a bid with OAO Rosneft for the 50 percent of TNK-BP held by four billionaires. Photographer: Mark H. Milstein/Bloomberg

April 11 (Bloomberg) -- OAO TNK-BNP Holding, the Moscow-traded unit of BP Plc’s Russian venture, rose to the highest in almost three months after a report that BP will ask for government permission to buy out its partners.

TNK-BP rose 2.2 rubles, or 2.4 percent, to 93.49 rubles as of the 6:45 p.m. close in Moscow, the highest since Jan. 19. That values the company at 1.4 trillion rubles ($50 billion)

BP may make a bid with OAO Rosneft for the 50 percent of TNK-BP held by four billionaires in an attempt to salvage a share swap and Arctic exploration deal with Russia’s state oil company, the Financial Times reported today, without saying where it got the information.

“Even though BP has a lot of obligations in the Gulf of Mexico, they had $19 billion in cash on the balance sheet at the end of 2010 and have more capacity through debt arrangements,” said Jason Gammel, an industry analyst at Macquarie Capital Ltd. in London.

BP Chief Executive Officer Robert Dudley is trying to save the Rosneft deal, announced at a meeting with Prime Minister Vladimir Putin in January, before an April 14 deadline for the share swap expires. The partners in TNK-BP, led by interim CEO Mikhail Fridman, persuaded a London court to halt the deal because it infringed the venture’s shareholders agreement.

“The situation frankly became messy,” Deputy Prime Minister Sergei Ivanov said on April 8.

Final Decision

As license holder, Rosneft will make the final decision on whom it chooses as a partner for the arctic Kara Sea, Ivanov said. If the court denies BP the right, then Rosneft will act alone or theoretically it will choose another partner, he said.

“It will be I am afraid a long legal battle,” Ivanov said of the litigation between BP and TNK-BP over rights.

BP spokesman Vladimir Buyanov declined to comment on the report. Rosneft spokesman Rustam Kazharov also declined to comment, as did Dmitry Peskov, a spokesman for Putin.

Last week, the arbitration panel left in place an injunction blocking the $7.8 billion share swap between BP and Rosneft. The arbiters allowed BP to seek an extension to the swap agreement’s April 14 deadline.

Stan Polovets, CEO of Access-Alfa-Renova, the group that represents the billionaire shareholders, said on Feb. 4 that they had no intention of selling their stake in TNK-BP. An AAR spokesman declined to comment further today.

An offer for 50 percent of TNK-BP would likely be the biggest oil and gas deal since Exxon Mobil Corp.’s $41 billion all-stock purchase of XTO Energy in Dec. 2009.

To contact the reporters on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net; Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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