Rosneft confirms acquisition of AAR interest

According to Russian business daily Kommersant (23 October 2012), Rosneft has reached agreement on the acquisition of the 50 per cent interest in TNK-BP held by AAR Consortium (Alfa Group, Access and Renova) for USD 28 billion, “subject to the performance of a number of terms and conditions.”

According to Rosneft chairman and president Igor Sechin, as a result of the acquisition of TNK-BP, Rosneft will be transformed into the third largest oil company globally. Rosneft will end up paying USD 55 billion for all of TNK-BP, including USD 45 billion in cash and the remainder in shares for BP.

According to Kapital analyst Vitaly Kryukov, the price is not exorbitant, given the current level of annual dividends generated by TNK-BP (USD 6 billion).

At the same time, however, Rosneft’s net debt to EBITDA ratio may well double. Rosneft will pay AAR in stages for its 50 per cent interest owing to the level of borrowing required to acquire TNK-BP.

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