Marathon to Acquire Khanty Mansiysk Oil Corp.
Marathon Oil and Khanty Mansiysk Oil Corporation have entered into a definitive merger agreement under which Marathon will acquire KMOC in a cash merger transaction. The aggregate purchase price for the transaction is approximately $275 million, including Marathon's assumption of all of KMOC's outstanding debt obligations, redemption of KMOC's outstanding preferred stock and cancellation of KMOC's outstanding derivative securities. Under the terms of the merger agreement, a wholly owned Marathon subsidiary will be merged with and into KMOC, with KMOC continuing as the surviving corporation and a wholly owned subsidiary of Marathon.
The transaction is subject to the approval of KMOC stockholders. Enterprise Oil Overseas Holdings Ltd. and Enterprise Oil Exploration Ltd. (both members of the Royal Dutch/Shell group of companies) own between them approximately 45 percent of the outstanding KMOC common stock and, under a stockholder agreement with KMOC, have until May 6, 2003, to either make a matching offer for the common stock they do not own or approve the transaction. Currently, a majority of non-Enterprise stockholders have committed to approve the transaction. Subject to the satisfaction of this and other closing conditions, the transaction is expected to close promptly, but in any event not later than May 13. A termination fee is part of the merger agreement.
It should be noted that Marathon's own estimates of specific KMOC operational and financial measures, including reserves and future production estimates, will be different than those currently available through public sources. Marathon will provide further information and asset integration details upon the successful completion of the transaction.
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