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. Last Updated: 07/27/2016

Paper: Rivals Vying for Sibneft

Gazprom wants core shareholders of oil firm Sibneft to gain greater control of their firm before Gazprom makes a final takeover bid, Vedomosti business daily reported Thursday.

Sibneft's core shareholders, led by Roman Abramovich control 72 percent of the company and are believed to be looking to sell it to Gazprom for more than $10 billion.

Gazprom is talking to Western banks about a loan to pay for the takeover bid, sources familiar with the situation said last month.

Vedomosti quoted sources close to talks as saying Gazprom had told Sibneft's owners that they should gain control of a 20 percent stake which is owned by stricken oil major Yukos. The remaining 8 percent of shares are freely floated.

Gazprom fears state-owned oil firm Rosneft could gain control of the 20 percent stake in Sibneft, complicating Gazprom's takeover, according to analysts.

Rosneft has bought the main production unit of Yukos and is looking at taking over its remaining assets, including the Sibneft stake.

"If the eventual winner of the 20 percent stake in Sibneft held by Yukos were to acquire 5 percent of the free float, they would end up with a blocking minority stake, and this would make it expensive for Gazprom to buy them out," the brokerage UFG said in a note.

Yukos obtained the stake in 2003 when it agreed to acquire Sibneft for more than $11 billion in cash and shares.

The deal collapsed after Russian prosecutors arrested Yukos' key owner, Mikhail Khodorkovsky, and brought Yukos to ruin with an unprecedented $28 billion back tax demand.

Yukos paid $3 billion in cash for 20 percent of Sibneft. The stake was frozen by prosecutors as part of an investigation into Yukos' activities.

Vedomosti quoted a Yukos source as saying the company would be looking to get a market price for the stake, which is currently worth $3.3 billion, as well as its portion of dividends, or $460 million.

Yukos would use the money to help pay back its outstanding tax debt of $10.5 billion.

"The overall news flow suggests the Gazprom-Sibneft tieup is increasingly becoming a reality, which also explains the recent strong performance by Sibneft," said Steven Dashevsky, chief analyst at Aton.

Sibneft's shares have risen more than 15 percent since late May, when speculation about the Gazprom bid first appeared.

Gazprom is trading at an all-time high of 105 rubles ($3.70) per share, up 38 percent since the beginning of 2005 as investors bet on both new acquisitions and the long-awaited liberalization of the share trading of the world's largest gas producer.

Gazprom's debt totals more than $16 billion, and Troika Dialog said in a note that the firm's desire to buy the entire 92 percent stake in Sibneft could prove difficult, as it would cost it $14.8 billion.

"Moreover, selling a 92 percent stake in one parcel could seriously delay the deal," it said in a note.

But Dashevsky said he believed that Gazprom's financial and lobbying abilities would help solve the situation.

UFG also said Sibneft's stock had little room left for potential gains.