BASF signs deal with LetterOne for Wintershall-DEA merger

BASF has entered a definitive combination agreement to merge its Wintershall oil and gas business with global investment firm LetterOne’s DEA, in order to create the largest independent European exploration and production company.

To be called Wintershall DEA, the combined entity will have operations in 12 countries across Europe, Latin America, North Africa and the Middle East, with pro-forma production of 575,000 barrels of oil equivalent per day (boe/d)last year.

The companies aim to increase the production of Wintershall DEA to between 750,000boe/d and 800,000boe/d in the early 2020s.

Once the transaction is closed, BASF will initially hold 67% of the combined company, while LetterOne will hold the remaining 33%.

BASF chief financial officer Dr Hans-Ulrich Engel said: “With Wintershall DEA, we create the leading independent European exploration and production company with international operations in core regions.

“By combining the two German-based entities, BASF and LetterOne lay the basis for further profitable growth.”

The merger is expected to result in synergies of at least €200m a year. Last year, the combined business of Wintershall and DEA generated revenues of €4.7bn and earnings before interest, taxes, depreciation and amortisation (EBITDA) of €2.8bn.

DEA Supervisory Board chairman Lord Browne said: “Wintershall DEA is the largest E&P merger in Europe for over a decade, and will have a diverse portfolio of outstanding growth prospects, with the scale needed to access important new opportunities.

“We expect the company to evolve rapidly into a world-class and globally competitive organisation with an international portfolio.”

Wintershall CEO Mario Mehren will serve as the CEO of the combined entity, which will be jointly headquartered in Hamburg and Kassel.

Subject to customary regulatory approvals, the transaction is expected to be completed in the first half of next year.

The companies entered discussions to pursue the merger last year.