BASF and Letter One hold discussions to merge oil and gas units

German chemical company BASF is holding discussions with regards to a potential merger of the group’s oil and gas unit Wintershall, with financial holding company Letter One’s oil and gas activities, which comprise the DEA Group.

The majority of the shares in the joint enterprise will be held by BASF.

The company noted that an Initial Public Offering (IPO) of the new company would be an option in the near future.

Furthermore, BASF added that there is no assurance that any transaction will be consummated.

Wintershall focuses on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East.

Together with Gazprom, the company also transports natural gas in Europe.

In 2014, Letter One outbid BASF to acquire DEA from Germany-based utility RWE, as part of its move to diversify its energy interests outside Russia, Reuters reported.

Subsequently, the talks between Letter One and BASF regarding a potential merger of their respective oil and gas activities were confirmed by DEA.

Net sales of BASF’s Oil & Gas segment amounted to around €2.8bn, EBITDA was around €1.6bn and EBIT stood at around €500m for the full year 2016.

BASF’s portfolio is organised into Chemicals, Performance Products, Functional Materials & Solutions, Agricultural Solutions and Oil & Gas segments.

The company generated sales of approximately €58bn last year.