| The merger of Rosneft reduced the capitalization of Gazprom The final decision on the merger of Gazprom and Rosneft should “greatly please” the gas concern’s investors, said Bob Foresman, head of the Russian division of the investment bank Dresdner Kleinwort Wasserstein, Gazprom’s consultant on this deal. “This is a very important step towards liberalizing the gas concern’s share market,” he told Interfax-AGI. However, portfolio investors, as evidenced by the results of yesterday's trading, assessed events differently: in Russia, Gazprom shares lost 0.72% in price, and on the London ADS Exchange the company fell in price by 1.65%.
Of course, it should be noted that the news of the imminent prospects for the long-awaited merger came at a time when the Russian market had just begun to correct after a significant rise in January-February. On Tuesday, the RTS index lost 0.32%. At the beginning of yesterday, players continued to take profits by selling securities, but the decline in quotations of blue chips occurred against the backdrop of a low volume of transactions. The news about Gazprom not only did not contribute to reversing the trend, but may have exacerbated it. By the end of the trading day, the RTS index lost 1.41% and stood at 704.05 points.
After the Houston court refused to consider YUKOS's petition, the gas concern's shares were the growth leaders among Russian blue chips. Investors seem to have already factored into the current price of Gazprom's securities all the positive consequences of the American court's decision on the merger of the gas company with Rosneft. The announcement yesterday of the details of this process put them in a critical mood and led to a decrease in Gazprom's capitalization. As it turned out, the transaction scheme provides for the separation of Yuganskneftegaz into a separate company, which is not, according to analysts from the OLMA Investment Fund, “the best option for Gazprom.” Interfin Trade analyst Arif Zeynalov notes that “Gazprom, which is not highly efficient and is burdened with debt, is acquiring an even less efficient and even more debt-ridden Rosneft without the highly profitable Yuganskneftegaz.” In addition, the new company will include the energy (10% of RAO UES and 25% of Mosenergo) and petrochemical (SIBUR) assets of the concern, the level of costs of which is higher than that of Gazprom itself. It remains unclear, according to Mr. Zeynalov, how Rosneft will be compensated for the costs of acquiring YUKOS assets. It cannot be ruled out that Surgutneftegaz will participate in the capital of the state oil company created on the basis of Yuganskneftegaz as a minority shareholder, which will reimburse Rosneft for expenses.
The uncertainty of the details of the scheme announced yesterday may lead to the fact that the price of Gazprom's shares will be subject to fluctuations in the near future. As the program of merger of the two companies is implemented and the liberalization of the concern's share market approaches, its capitalization, according to analysts, should increase. Thus, the head of the analytical department of FC Megatrustoil, Alexander Razuvaev, believes that the price of $4.22 per Gazprom share is “not far off.” Yesterday on the Russian market one security of the concern cost 84.2 rubles.
Leaders in Russian oil production (as of January 2005), million tons Position Before the merger of Rosneft and Gazprom After the merger of Rosneft and Gazprom | 1 | LUKOIL | 7.3 | LUKOIL | 7.3 | | 2 | "Rosneft" | 6.12 | TNK-BP | 6.08 | | 3 | TNK-BP | 6.08 | "Surgutneftegaz" | 5.2 | | 4 | "Surgutneftegaz" | 5.2 | "Yuganskneftegaz" | 4.2 | | 5 | "Sibneft" | 2.8 | Gazprom | 3 | | 6 | YUKOS | 2.6 | "Sibneft" | 2.8 | | 7 | "Tatneft" | 2.2 | YUKOS | 2.6 | | 8 | "Slavneft" | 2 | "Tatneft" | 2.2 | | 9 | Gazprom | 1.1 | "Slavneft" | 2 |
Source: Troika Dialog Investment Company Igor POLISCHUK
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