FRANKFURT/LONDON (Reuters) - Wintershall DEA’s owners are expected to shortly mandate banks for a bumper 2020 stock market listing of the European oil and gas company in a sign that the deal could take place earlier than anticipated, people close to the matter said.
German chemicals group BASF and LetterOne, a vehicle of Russian billionaire Mikhail Fridman, have asked banks to pitch for roles in the initial public offering of Wintershall DEA, which will result from a merger that is expected to close in the first half of 2019, they added.
Banks are expected to be mandated next month, they said, adding that the company wants to ready for a listing by the end of the year.
BASF and DEA declined to comment.
With core earnings of 2.8 billion euros (2.4 billion pounds) in 2017, Wintershall DEA could be valued at around 15 billion euros if it secures a valuation in line with peers.
While Frankfurt is seen as the default venue for the IPO, Wintershall DEA may opt for a dual listing in Frankfurt and Oslo, one of the people said.
BASF Chief Executive Martin Brudermueller said last month that he expects that the IPO to take place in the second half of 2020 at the earliest, adding that the exact timing will depend on market conditions.
However, if the Wintershall DEA merger closes by summer as planned and the integration of the two companies goes ahead smoothly, the groups would target being ready for an IPO early to avert missing a window of opportunity, the people said.
For any IPO to be successful, capital markets have to be in the right shape. And in Wintershall DEA’s place, the oil price also has to at levels viewed as supporting a deal, bankers said.
“We want to start preparing for a listing by the end of this year. The actual listing will probably be in 2020,” a senior source in one of the merging companies said.
BASF and LetterOne last year agreed to combine their respective oil and gas businesses to better compete against much larger rivals such as Shell, BP or Total.
LetterOne outbid BASF in 2014 to acquire DEA from German utility RWE to diversify its energy interests outside Russia. BASF has said it would initially hold 67 percent in Wintershall DEA, with the stake increasing to 72.7 percent before the combined group’s planned stock market listing.
Wintershall DEA aims to boost joint average daily output by around 40 percent to 800,000 barrels of oil equivalent from 2021-2023, up from a pro-forma 575,000 barrels in 2017.
It expects synergies of at least 200 million euros per year as of the third year following the closing of the transaction and last month said it would cut almost one out of four jobs, or around 1,000 full-time positions, once the merger is approved and completed.
In 2017, the combined business of Wintershall and DEA had pro-forma sales of 4.7 billion euros and a net income of 740 million euros.
Addiitonal reporting by Christoph Steitz and Ludwig Burger; Editing by Thomas Seythal/Keith Weir