BASF ready to push Wintershall Dea IPO against co-owner’s opposition

FRANKFURT (Reuters) -BASF, co-owner of Nord Stream 2 backer Wintershall Dea, said it was prepared to push through an initial public offering of the oil and gas business next year even as markets are roiled by Russia’s attack on Ukraine.

The dispute over the IPO timing erupted last month when Wintershall Dea co-investor LetterOne came out opposing the market flotation – which the joint venture partners had already agreed on – for the time being.

“Given the significant strategic relevance of the IPO (of Wintershall Dea) for BASF and our stakeholders, we will use all available means to protect our rights and interests, including legal remedies and the right to unilaterally pursue an IPO in 2023,” BASF finance chief Hans-Ulrich Engel said in speech on the chemical group’s full-year results.

The reaffirmed goal comes after Russia, on which Wintershall Dea relies for nearly half of its oil and gas production, attacked Ukraine in the biggest assault on a European state since World War Two, drawing international condemnation.

German chemicals giant BASF on Friday also forecast lower 2022 operating earnings due to slower economic growth, also citing a supply chain that is vulnerable to disruptions.

The company said earnings before interest, tax and special items will likely be between 6.6 billion euros ($7.4 billion) and 7.2 billion euros this year, down from 7.77 billion euros in 2021.

It added any fallout of the Ukraine invasion on its business could currently not be quantified.

Wintershall Dea’s operations, however, were for now not affected by new Western government economic sanctions against Russia.

Despite a very strong start to the year, “BASF expects global economic growth of 3.8% to be somewhat more moderate in 2022 following the very strong recovery in 2021”. Last year, it saw a rebound in industrial demand from initial pandemic woes.

The forecast takes into account the risk of supply chain disruptions, more pandemic headwinds and potentially higher energy prices, BASF said.

Wintershall said on Thursday a “politically motivated” cancellation of Gazprom’s Nord Stream 2 gas pipeline, which Wintershall co-funded, would enable its operator to lodge compensation claims.

Germany has effectively halted a ramp-up in preparations on the pipeline following a first wave of sanctions on Russia, where Wintershall has been active for more than three decades.

BASF holds 67% of the ordinary voting shares in Wintershall, DEA or a total of 72.7% taking into account non-voting preference shares.

Russian billionaire Mikhail Fridman’s investment firm LetterOne, which owns the rest, last month said an IPO could lead to excessive dividends as well as an unjust discount on its value because investors were shunning Russia-linked assets.

BASF’s group EBIT, adjusted for one-off items, rose more than 10% to 1.23 billion euros in the three months through December, missing a company-compiled estimate of 1.35 billion euros.

The shares fell 4.8% to 58.12 euros for a decline of more than 13% this week, as Stiefel analyst Andreas Heine described the results a “disappointing outcome across the board”.

The German company proposed an annual dividend of 3.40 euros per share, slightly above expectations of 3.39 euros.

(Reporting by Ludwig Burger; Editing by Kirsti Knolle, Shounak Dasgupta and Kim Coghill)