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. Last Updated: 07/27/2016

YukosSibneft Propels RTS to 6-Year High

Expectations that big dividends will result from the merger of Russia's second- and fifth-biggest oil firms boosted the country's main share index Wednesday to a level not seen since before the 1998 economic crisis.

The benchmark Russian Trading System index closed 2.67 percent higher at 429.44 -- a level not seen since June 1997. The value of shares traded was moderate, at $39.89 million.

On Tuesday, Yukos and Sibneft announced a merger valued by some analysts at around $15 billion. The new company, YukosSibneft, would be one of the world's top five oil producers.

The deal is set to be completed by the end of the year, but Yukos said that prior to completion of the transaction it was considering distributing cash to its shareholders in the form of dividends and share buybacks.

"Yukos has been criticized in recent months for poor corporate governance," said Alexei Bachurin, chief trader at investment and finance company Metropol.

"When it was announced that the company planned to give its shareholders a couple of billion [dollars] in dividends during the merger, it cheered everyone up."

Yukos closed 6.62 percent higher at $11.92, while Sibneft closed 3.54 percent higher at $2.485.

Bachurin also attributed the rise to the fact that many traders had sold their Yukos stock and accumulated short positions on Tuesday, when the deal was announced after weeks of rumors.

Oleg Martynenko from Alfa Bank estimated Yukos' annual dividend for 2002 at $1.2 per share.

He attributed the rise in Yukos to a re-evaluation of the company as demand from foreign investors grew.

"Sibneft may look even better after re-evaluation, but it is less liquid and has no dividends," he said.

(Reuters, MT)