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. Last Updated: 07/27/2016

Ministry Approves YukosSibneft Merger

APYukos CEO Mikhail Khodorkovsky
The Anti-Monopoly Ministry said Thursday that it had approved a merger between oil majors Yukos and Sibneft, quashing speculation the deal could collapse due to a dispute between Yukos and the Kremlin.

The ministry said in a statement it had approved the $12 billion to $15 billion transaction with a number of conditions, including an obligation that the merged firm grant fair access to its regional retail markets and refineries.

Any move by the merged company to block competition could result in it being forced to sell off its refineries in Omsk, Achinsk and Angarsk, Interfax reported, citing a copy of the ministry's recommendations.

Yukos announced plans in April to acquire Sibneft by the end of 2003 to become the country's largest and the world's fourth-biggest private oil producer. But analysts had speculated that the deal could be delayed or scrapped due to a stand-off between the firm and the Kremlin.

Yukos CEO Mikhail Khodorkovsky had told the Financial Times in an interview last week that he thought the merger deal had strengthened opposition to his company from reactionary forces in the Kremlin. He said it could have served as the trigger to the legal attack. Many analysts have seen the tie-up as creating a powerhouse with the global clout to stand up against the Kremlin and state controlled energy firms Gazprom and Rosneft. Yukos has vied with these companies for licenses in the Russian Far East.

Yukos spokesman Alexander Shadrin praised the ministry's decision Thursday, saying one of the last obstacles for the two firms to merge by the end of 2003 had been removed. But he declined to say whether he thought the conflict around Yukos was dying down.

The affair prompted concerns among business leaders that authorities might review the results of a massive sell-off of state property in the 1990s, in which Khodorkovsky and a handful of other so-called oligarchs made vast fortunes.

Yukos says the July arrest of major shareholder Platon Lebedev on charges of stealing state property in a 1994 privatization deal, which sparked a series of investigations and raids, was part of a campaign orchestrated by conservatives in the Kremlin as a warning shot to Khodorkovsky to stay out of politics.

The 40-year-old billionaire has said he will finance the liberal opposition ahead of parliamentary elections in December and presidential elections next March, which President Vladimir Putin is expected to win.

Analysts said the decision could mark the beginning of the end to the Yukos conflict.

"It is a very positive signal, which confirms that the merger goes ahead as planned. It also probably means that the conflict is dying down. It is not fully clear yet, but I hope the worst has passed," said Leonid Mirzoyan from Deutsche Bank.

The news came after close of trade on the RTS bourse, where Yukos shares ended down 0.22 percent at $13.72.

Vladislav Metnyov from Trust bank said he expected shares to rally on Friday, though Brokercreditservice brokerage said shares could correct down as expectations of the decision had already been priced in by the market in recent days.

(Reuters, MT)