Tyumen Oil, Slavneft clash in control struggle
What started as a struggle for supremacy between two Russian oil companies is now escalating toward an out-and-out war. Slavneft has officially announced plans to acquire stakes in subsidiaries of Tyumen Oil Co. (TNK). The move confirms that the company is struggling to ward off a hostile takeover bid by TNK. TNK has stated that it recently acquired blocking stakes in Slavneft's main subsidiaries and now says that it intends to buy the state-owned holding itself when it is tendered.
MOSCOW�What started as a struggle for supremacy between two Russian oil companies is now escalating toward an out-and-out war.
Slavneft has officially announced plans to acquire stakes in subsidiaries of Tyumen Oil Co. (TNK). Slavneft's announcement confirms that the company is struggling to ward off a hostile takeover bid by TNK.
For its part, TNK says it recently acquired blocking stakes in Slavneft's main subsidiaries and now intends to buy the state's holding in Slavneft itself when the government shares are tendered later this year. Moreover, TNK plans to become a consolidated company by means of a share swap combined with an American Depository Receipts issue early in 2001.
Slavneft could well foil these plans through its ownership of stakes in TNK subsidiaries. There should be plenty of remaining room for bargaining between the two companies, however.
Industry observers surmise that Slavneft, as a precautionary measure, has avoided buying shares in Tyumen subsidiaries directly, instead relying on proxy firms affiliated with company management. Of course, should Tyumen win control of Slavneft in a tender, all of Slavneft's assets would automatically go to TNK.
Slavneft management claims that the company has already acquired a 10% interest in TNK unit Nizhnevartovskneftegaz, 5% in Samotlorneftegaz, and 5% in Nizhnevartovskoye NGDP. Slavneft is also seeking to buy TNK's Ryazan refinery.
In recognition of all these related risks, many believe TNK is likely to begin actively buying up shares in its own subsidiaries. In the short term, share prices for TNK subsidiaries could well rise as a result of such speculative buying.
The Russian government appears to be moving forward with plans to sell its stakes in three of the country's oil firms, despite some internal opposition.
The Russian Property Ministry has submitted proposals to the Kremlin regarding sale of the state's holdings in Slavneft and Onako�19.68% and 85%, respectively. The state's share in Slavneft will be sold at a special cash auction (i.e., the package will be divided between auction participants in proportion with their bids). The auction is scheduled for later this year.
The prime contender for the Slavneft stake is TNK, which already owns 12.5% of Slavneft shares. But Sibneft's President Yevgeny Shvidler also has displayed interest in purchasing the state holdings in both oil companies.
The stake in Onako will be sold through an investment tender. This plan is opposed by Yukos, which says it would buy the package at a cash auction.
An investment auction is also planned for the state's 25% share of Rosneft. The Fuel Ministry opposes the Property Ministry's plan, however, and is still campaigning for creation of a state oil holding based on shares in Rosneft, Slavneft, and Onako.