Investment conglomerate LetterOne Group has announced its intention to block efforts to list German oil and gas company Wintershall Dea, citing market volatility caused by escalating tensions on the border with Ukraine. This represents a consecutive escalation with German shareholder BASF over the management of the energy company.
LetterOne Group was founded by Russian billionaire Mikhail Fridman, who remains its chairman. The group is a minority shareholder of Wintershall Dea, which was formed from a merger between LetterOne’s DEA Deutsche Erdoel and Wintershall, owned by chemicals group BASF. Wintershall Dea is currently Europe’s largest private energy company and operates some activities in Russia.
BASF now holds around two-thirds of the shares in Wintershall Dea and intends to take the company public to sell its stake. In a statement to the Financial Times, BASF reiterated that the group “is fully committed to divest our stake in Wintershall Dea and we continue to view an IPO as the best way to market our stock.”
LetterOne, meanwhile, is resisting an IPO, allegedly claiming that market uncertainty about the risk of a war between Russia and Ukraine (as well as Wintershall Dea’s potential reputational damage related to its operations in Russia) could lead to an undervaluation.
LetterOne also pointed to the developing energy crisis in Europe, arguing that an IPO would divert attention from Wintershall Dea’s ability to provide Europe with a reliable supply of gas.
The LetterOne Group, which holds a 27% stake in Wintershall Dea, has repeatedly argued that long-term investments in the company and sustained stability of its leadership are essential for its development. Now she has told the FT that “short-term pressure from stakeholders” on BASF to sell its shares will jeopardize the company’s future.
LetterOne Group also emphasized its preference for mergers and acquisitions and other potential value creation activities (which BASF reportedly does not support) and hinted that an IPO could divert focus away from them.
LetterOne said it would support a listing of Wintershall Dea “if it makes commercial sense” and that it would support higher dividends “if they align with the company’s sustainable interests, goals and strategy.” FT reported.
This isn’t LetterOne’s first spat on corporate governance. The group and Turkey Wealth Fund (TWF) were reportedly at odds in early January over the board of underperforming mobile operator Turkcell.