The chemical company BASF is making progress with the separation of Wintershall Dea. As the company announced on Thursday, BASF, Letter One and the British Harbor Energy want to combine significant parts of their oil and gas business. Wintershall Dea’s businesses with a connection to Russia are left out. Wintershall’s stake in the gas transport company Wiga and the headquarters in Kassel and Hamburg are also not part of the transaction. According to the announcement, they will probably be closed. Harbor wants to take over “some” of the approximately 850 employees. Subject to regulatory approvals, BASF expects the transaction to close in the fourth quarter of 2024.
According to the company, Wintershall Dea employees will be informed in more detail at an internal event tomorrow. In an initial reaction, Wintershall Dea CEO Mario Mehren said: “Our shareholders have decided to transfer a significant part of Wintershall Dea’s E+P business to Harbor and to close the headquarters in Kassel and Hamburg. For the Wintershall Dea team “In Kassel and Hamburg and for me personally, this news, just before Christmas, is a big disappointment.”
BASF currently holds 72.7 percent of Wintershall Dea, Letter One 27.3 percent. As part of the transaction, the two will receive $2.15 billion in cash from Harbor, including $1.56 billion from BASF, and newly issued shares in Harbor. After completion of the planned deal, BASF and Letter One will hold 54.5 percent of Harbor, with BASF alone holding 39.6 percent. According to the announcement, the transaction includes assets of Wintershall Dea worth $11.2 billion, including outstanding bonds. Pro forma combined sales in 2022 were $13.5 billion.
Wintershall Dea’s Russia-related business, which is housed in its own company, is more problematic. According to the statement, BASF and Letter One remain their owners. After Russia’s attack on Ukraine, BASF had to write off billions on its stake in Wintershall Dea. According to previous media reports, Wintershall Dea and BASF want to make use of the state guarantees granted for investments in Russia. According to a report by the Frankfurter Allgemeine Zeitung from spring it’s around 2.5 billion euros.
Wintershall sees itself de facto expropriated in Russia. And that’s probably the case. As the Reuters news agency reported this week, Wintershall Dea and Austria’s OMV are set to lose their shares in gas production projects in the Russian Arctic. All activities with Russian involvement are to be legally separated by mid-2024. This also includes Wintershall Dea’s participation in the Nord Stream gas pipeline and the joint venture with Gazprom. This emerges from a decree signed by Kremlin chief Vladimir Putin.