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BASF in talks to combine oil and gas activities with LetterOne’s DEA

German chemicals giant BASF has announced that it is discussing a potential merger of its oil and gas activities with those of DEA, which belongs to  Luxembourg-based investment fund LetterOne.

DEA was purchased by Russian billionaire Mikhail Fridman’s Luxembourg-based investment fund LetterOne in 2015 for €5.1bn, just before oil prices collapsed.

In an announcement made today (24 November, 2017), BASF said would hold the majority of the shares in the joint enterprise.

An Initial Public Offering (IPO) of the joint enterprise would be an option in the medium term. The outcome of the discussions is open and there is no assurance that any transaction will be consummated, BASF said in a statement.

BASF’s oil and gas activities are bundled in the Wintershall Group.

Wintershall focuses on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East.

Together with Gazprom, the company is also active in the transport of natural gas in Europe. For the full year 2016, net sales of the Oil & Gas segment of the BASF Group amounted to around €2.8 billion, earnings before interest, taxes, depreciation, and amortization (EBITDA) was around €1.6 billion and EBIT around €500 million.

In a statement, BASF said it did not wish to “make any additional comments on this matter at this time”.