KazMunaiGas EP in Prelimary Takeover Discussions With Parent

KazMunaiGas Exploration Production, the London-traded unit of Kazakhstan’s state oil company, received a preliminary takeover approach from its parent that values it at about $7.8 billion.

KazMunaiGaz National Co. offered $18.50 per global depositary receipt it doesn’t already own, a 15.05 percent premium on the July 21 price, it said in a statement. The proposal values KazMunaiGas EP’s assets, excluding cash the unit holds, at a premium of 40.7 percent based on the July 21 closing price of $16.08, according to the statement.

The approach “is at an early stage,” KazMunaiGas EP said in a regulatory filing. “The independent non-executive directors of the company are in the process of appointing advisers and will consider any proposal from KazMunaiGaz National Co. in due course.”

The national oil company, which owns 16.88 percent in the $48 billion Kashagan oil project, is considering an initial public offering within one to two years as part of a government privatization drive, Kairat Kelimbetov, central bank governor and former deputy prime minister, said in November. KazMunaiGaz National Co. declined to comment in May whether it will buy out KazMunaiGas EP and include it in the sale.

KazMunaiGaz National Co. has $13 billion of debt, with annual payments of $1 billion to $1.6 billion due from next year through 2018, according to data compiled by Bloomberg.

The global depositary receipts rose 2 percent in London to $18 at 2:15 p.m. They’ve gained 15 percent this year.

Production at Kashagan, whose partners include Exxon Mobil Corp., Royal Dutch Shell Plc, may resume at the end of next year, Economy and Budget Planning Minister Erbolat Dosayev said in April. The project produced oil briefly last year after a series of delays and cost overruns.

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