OAO Rosneft declined for a second day after acquiring full control of OOO Itera in a $2.9 billion deal that the most accurate analyst covering the stock said was overpriced.
The shares fell as much as 1.5 percent and traded down 0.7 percent at 226.01 rubles by 12:24 p.m. in Moscow. Rosneft’s global depositary receipts lost 1.9 percent to $6.74, with volume at 1 million shares.
Rosneft bought the remaining 49 percent in Itera, an independent natural gas producer and trader, according to a statement released yesterday. Rosneft and Itera last year teamed up to produce and sell gas, with the oil producer acquiring 51 percent of the joint venture in exchange for the Kynsko-Chaselsk field and $173.4 million in cash.
“On a relative basis Itera was priced expensively compared with the current multiples of Rosneft, and this would make it difficult to justify the acquisition with the argument that the company’s reserves could be further monetized via a boost in production,” VTB Capital analysts led by Dmitry Loukashov said in an e-mailed note. Loukashov is ranked first by Bloomberg among analysts covering Rosneft based on returns on all the securities he covers. “We see the deal as dilutive for Rosneft’s shareholders,” he said.
State-controlled Rosneft is challenging OAO Gazprom, the world’s biggest gas producer, with plans to double its share of the domestic market and sell liquefied natural gas to Asia.
“We think the purchase was rather expensive,” Sberbank CIB analysts led by Oleg Maximov, who is ranked fourth by Bloomberg among analysts covering Rosneft. Considering Itera’s debt level, Sberbank CIB sees its equity value as $2.4 billion versus the $2.9 billion paid by Rosneft, according to the note.