Shares of “Rosneft” and “Bashneft” have been adjusted in anticipation of the deal – RIA Novosti

18:5706.10.2016

(updated: 19:10 06.10.2016)

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MOSCOW, October 6 — RIA Novosti/Prime. Ordinary shares of “Rosneft” and “Bashneft” corrected and preferred shares of Bashneft came under pressure on the confirmation of the expected news on the purchase by Rosneft of state-owned stake of “Bashneft”.

17.20 MSK shares of “Rosneft” have grown on 0,25% — to 342,55 rubles, ordinary shares in Bashneft were down by 1.49% to 3,165 thousand rubles, preferred shares of Bashneft fell by 6.42% to 1,675 thousand rubles (fell by 7.4% to 1,658 thousand rubles – to the lowest level since January 20). The MICEX index grew 0.15%.

Rosneft will acquire of 50.08% of shares of “Bashneft” at a price not higher than 330 billion rubles, the relevant contract of sale must be signed before October 15, reported on the website of the Russian government in a press release about the directives to the members of the Board of Directors of “Rosneft”.

According to the report, representatives of the Russian Federation in the Board of Directors of “Rosneft” were instructed to vote “for” the decision, providing for the acquisition of federally-owned shares of OJSC “ANK “Bashneft” on the following conditions: the number 88,951 million ordinary shares, representing 50,0755% of the share capital; the purchase price is not higher than 330 billion rubles.

in addition, the approved Directive called for the adoption by the Board of Directors of “Rosneft” the decision to entrust the “sole Executive body of the company to sign the contract of purchase and sale of shares of JSC “ANK “Bashneft”, providing the subsequent receipt of all requisite corporate approvals and decisions of public bodies under the Russian legislation and the company Charter, in the period until 15 October 2016″.

Optimists

“Everything was as expected. For shares of “Rosneft” this is positive news, because, according to our estimates, the additional cost which the company creates this acquisition is $ 1.4 billion, or 2% of the capitalization of “Rosneft”, — says a senior analyst on oil and gas sector of the company “Aton” Alexander Kornilov.

“We continue to recommend investors that hold ordinary shares of “Bashneft” to continue their “hold” because de facto, then Rosneft will have to make a mandatory offer to buy back shares. The price at which buys Rosneft, includes a premium for control, so it is above the fundamental value of the ordinary shares of “Bashneft”. Accordingly, it is a unique opportunity for shareholders of Bashneft to sell so expensive,” — says the analyst.

the Kornilov notices that with preferred shares, the situation is ambiguous. On the one hand, there are certain attempts to adopt the amendments to the legislation that would oblige the buyer to make an offer to the holders of preferred shares. But due to the fact that the transaction accelerates the Duma in its new composition is unlikely to approve the amendments in the second and third reading (the first they had already been approved by the former composition of the Duma), a mandatory buy-back, most likely, will not, he adds.

the Analyst of FG BKS Cyril Tachennikov also positively refers to the fact that the authorities resume the privatization process, acting as a positive catalyst.

“If “Rosneft” will buy the government’s stake at a price named Sechin (corresponds to the upper bound of the estimated state share), the minority shareholders of “Bashneft” will be able to benefit as a result of potential repurchase shares with a 10-15% premium to the spot prices. At the same time, Rosneft will get synergy (estimated to be at 160 billion rubles) without blurring its own multiples (“Bashneft” is trading with lower EV/EBITDA of 4.2 x versus 5.2 x in “Rosneft”) and will be able to avoid a substantial increase to its high debt burden,” he comments. the

Pessimists

Analyst “Discovery Broker” Andrei Kochetkov, in turn, believes that the purchase of shares of “Bashneft” negative for papers “Rosneft”.

“This worsens the prospects of dividend payments on shares of the oil giant in 2016, and increases the debt burden of the company. If in the future a decision will be made about a full takeover, and the investment of minority investors in securities of “Bashneft” may suffer because the buyer wants to consolidate the company on favorable terms,” — explains his point of view the analyst.

In the short term, you can expect a slight increase in “Bashneft”, which should be used to exit positions, he recommends.

the government’s Decision is likely dictated primarily by the interests of the budget: to quickly and the maximum amount possible, says Director of the analytical Department of “Alpari” Alexander Razuvaev.

“economic reforms and efficiency of the economy, the deal has nothing to do. The share of state sector in the economy of Russia is about 70%, but in fact we see that the government is satisfied. If “Rosneft” there is free money, then why not send them to the payment of dividends? It would have liked to the market and the officials. After all, the budget would receive more than half of the amount,” — says the analyst.

I Wonder what the conditions will offer “Rosneft” third party shareholders “Bashneft” says Razuvaev. To offer the best conditions of the exchange or redemption of shares to minority shareholders possible, but not to the government of Bashkiria, he adds.

In conclusion, we should say, that immediately after the sale of “Bashneft” should be followed by selling 19.5% of “Rosneft”, it should bring in a budget of 700 billion rubles, adds Razuvaev.