Russian Oil Giant Suspends Merger With Troubled Yukos
MOSCOW — In a move that appeared to stun even some senior managers, Russian oil giant Sibneft put its nearly completed merger with rival Yukos on hold Friday, delaying a deal that was expected to create the world's fourth-largest oil company.
The decision raised questions about possible behind-the-scenes maneuvering by the Kremlin, which has in recent months moved to control the growing power of a potential $35-billion enterprise whose combined output would rival that of Kuwait.
Analysts also said Sibneft shareholders -- including tycoon Roman Abramovich, owner of London's Chelsea soccer club -- might be looking for a way to negotiate a better deal or back out entirely after the arrest five weeks ago of Yukos' then-chief executive, Mikhail Khodorkovsky, on fraud and tax-evasion charges.
The cryptic announcement threw the Russian financial community into turmoil, as neither Yukos nor Sibneft explained the reasons for the delay and financial analysts struggled to interpret it. Most believed that Abramovich, for various reasons, was attempting to kill the deal.
The value of Yukos shares fell 5.3%, to $11.36, and Sibneft slid 3.7%, to $2.35. But overall, Russian markets were down only about 2%, suggesting that the ramifications might be limited, at least financially.
Politically, however, the effects could be major. If the Kremlin is acting quietly to block the merger, it could indicate not only President Vladimir V. Putin's discomfiture at the prospect of a single private company controlling so much of the nation's oil wealth, but also the Kremlin's unease with reported negotiations to sell up to a 40% stake in the combined new company to a major Western oil firm such as ExxonMobil.
In a country with notoriously opaque high-level political maneuverings, some analysts are even suggesting that Khodorkovsky may have sought to block the deal in the hope that easing the Kremlin's fears about Yukos' growing clout would help end his legal troubles.
"I think it was Khodorkovsky's decision to prevent this merger at the last moment. He must have realized from prison what was going on outside the prison walls and must have passed this message to his partners," said Yulia Latynina, an analyst with radio station Echo of Moscow.
In the only government reaction to the announcement, Economics Minister German O. Gref said there was "nothing tragic" about the suspension, adding cryptically that if the merger did not go through, "the risk related to the problems management of one company is having with taxes will subside."
