TNK-BP Makes $8.1B Bid For BP Stake

Scrambling for ways to stop the partnership between BP BP, Europe's second-largest oil company, and OAO Rosneft, Russia's largest oil company, TNK-BP is reportedly making an $8.1 billion for the 5% stake in BP Rosneft is due to acquire. In January, BP and Rosneft announced a contorversial $16 billion share exchange that will see the Russian oil giant acquire 5% of BP for $7.8 billion. The two companies are looking to form a partnership to explore for oil in the Russia section of the Arctic Circle. TNK-BP, BP's joint Russian venture with oligarch investors, has been upset about BP's deal with Rosneft since it was announced. TNK-BP is pursuing arbitration against BP for violating the venture's shareholder rights agreement, that TNK-BP has exclusive rights to BP's Russian business dealings. Under the terms of TNK-BP's offer for 5% of BP, it would buy that stake and then swap it for 10% of Rosneft. BP's deal with Rosneft is on hold because the oligarch investors have won an injunction to block the deal. TNK-BP, Russia's third-largest oil producer, has been fearful that the BP-Rosneft partnership would hurt the venture from a competitive standpoint. While the two deals appear similar, there are key differences, the most important being that TNK-BP would own the Rosneft stake. BP would, therefore, own only half of this stake, but would gain $8.1 billion in cash, according to press reports. The TNK proposal would also negate any risk arising from the Swedish tribunal blocking the Rosneft deal and offer BP shareholders a degree of protection as the stake in Rosneft would be owned at arm's length, according to the Australian.