Subject to regulatory approvals, the deal - in the form of a joint venture between BP and Veba Oil's owner E.ON - involves BP taking 51 percent and operational control of Veba Oil and offers the prospect of full ownership as early as the second quarter of next year.
In return, E.ON will receive 51 percent of Gelsenberg - which holds BP's 25.5 percent stake in Ruhrgas, Germany's leading gas distributor - plus a balancing cash payment of $1.63 billion, subject to adjustments, and an assumption by BP of $950 million of debt. Terms have also been agreed which could result in BP transferring its remaining Ruhrgas stake and paying a further $340 million for the remainder of Veba Oil.
The cash cost to BP of acquiring all of Veba Oil could be significantly offset by proceeds from a re-sale of Veba Oil's upstream business which produces 160,000 barrels of oil and gas equivalent a day. These proceeds would be shared with E.ON but with the bulk accruing to BP.
Under the terms of the deal, which is subject to the approval of the European Commission and other authorities, BP and E.ON, will form two joint ventures. The first gives BP 51 percent and operating control of Veba Oil with the balance held by E.ON. In return, the second gives E.ON a 51 percent stake in Gelsenberg which holds BP's 25.5 per cent of Ruhrgas.
The agreement incorporates 'put' options giving the minority shareholder in each joint venture the right to be bought out by the majority owner. Both options are exercisable after the first quarter of next year.
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