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Mergers, Acquisitions and Takeovers Case Study

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Case Title:

Gazprom and Rosneft Alliance: A Win-Win Strategy

Publication Year : 2007

Authors: Dileep Warrier, Saravanan. I.B

Industry: Entertainment

Region:Russia

Case Code: MAA0097C

Teaching Note: Available

Structured Assignment: Not Available

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Abstract:
From 2002 onwards, Russian companies were outperforming Saudi counterparts in oil and gas production. Gazprom, a behemoth Russian company was the biggest natural gas supplier in the world with a market capitalisation of US$ 270 billion as of May 2006. Instead of cooperating with foreign companies, which were ready to invest in oil and gas exploration programs in Russia, it signed an agreement of cooperation with Rosneft. Gazprom had locked horns with Rosneft regarding acquisition of Yukos, a company which was facing bankruptcy charges in 2000s. Eventually, major assets of Yukos were acquired by Rosneft in 2004, which gave the company access to more oil and gas resources. A merger negotiation between Gazprom and Rosneft was also postponed in 2005. On November 29, 2006, Aleksei.B.Miller and Sergei.M.Bogdanchikov, the chief executives of Gazprom and Rosneft, agreed to form joint ventures for exploration of new oil reserves, building petrochemical plants, and to bid on field licenses outside Russia. But there were many challenges too. The major stakeholder in both the companies was the Russian government and changes in political administration could affect corporate decisions. The UGS pipeline of Gazprom passed through many countries in Europe and was prone to attacks of terrorism. There were incidents of corruption and sleaze, and both the companies had debts to the tune of 10-12 billions. This move was also considered a shift towards nationalization as it meant a confluence of two companies for cooperation which had large state holdings. The case allows for discussion on the future of the alliance, the synergies and challenges that would emerge.

Pedagogical Objectives:

  • To discuss Russian oil and gas industry
  • Gazprom & Rosneft- Two leading oil and gas producing companies in the world
  • Alliance between the two companies and synergies possible.

Keywords : Mergers,Acquisitions,Alliances Case Study;Gazprom; Rosneft; Yukos; Sibneft; Unified Gas Transportation System ( UGS); Volga Ural Region; Western Siberia; Russian Government; Alexei.B.Miller; Sergei.M. Bogdanchikov; Russian oil Industry; Oil Reserves; Natural gas; Nationalisation; Petrtroleum and Natural gas exploration

Contents : 
Russian Oil & Gas Industry
The Two Russian Giants
Alliance in Russian Energy
Map of Volga Ural Region & Oil Output
Gazprom- Logo, CEO & Share Capital Structure
Unified Gas Transportation System in Russia (UGS)
Gazprom Production Statistics & Green Field Developments

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