Rosneft and AAR consortium sign $28 billion deal for 50% stake in TNK-BP

MOSCOW – Russia’s Rosneft and the consortium of Alfa Group, Access Industries, and Renova (AAR) signed a sale and purchase agreement for the 50% stake in TNK-BP on Dec. 12. The transaction price is set on the basis of the valuation of AAR’s TNK-BP stake at $28 billion. Completion of the deal is expected in the first half of 2013 after receiving approvals from Russian and EU anti-monopoly regulators.

Commenting on this agreement, Rosneft President Igor Sechin said: “We consider the acquisition of TNK-BP to be strategically attractive for the shareholders of Rosneft. The agreements signed [Dec. 12] enable Rosneft to fully consolidate the business it is acquiring and realize significant synergies. The agreements reached put us in the position to immediately begin preparing the integration process.”

Viktor Vekselberg, chairman of the Renova Group, said: “Through this transaction, Rosneft acquires not only high-quality oil and gas assets, but also a unique corporate culture and operating experience accumulated by TNK-BP during the decade of the existence of our joint venture. These will no doubt help the transformation of Russia's largest oil company into a global leader.”

German Khan, TNK-BP executive director and member of the board of Alfa Group, said: “A deal of this scale has never been done in Russia. The very fact that it is taking place attests to the growing potential of Russia’s economy, and reflects Russia’s leading role in the global oil and gas industry.”

The law firm Skadden, Arps, Slate, Meagher & Flom LLP is representing AAR on the approximately $56 billion sale of the TNK-BP joint venture to Russian state-owned oil company Rosneft. Members of the Skadden M&A team from London, Moscow, Brussels, and Hong Kong were involved in executing the sale.

This is the largest M&A transaction globally for more than three years. AAR’s 50 % stake in TNK-BP is valued at approximately $28 billion. Rosneft’s acquisition of TNK-BP brings to an end a joint venture between AAR and BP which was highly successful economically, but which was fraught with practical difficulties and political controversy. In 2011, AAR used a High Court injunction to prevent BP from forming a strategic alliance with Rosneft to exploit oil reserves in the Arctic Circle.

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