German-based BASF and LetterOne have created a new major player in the oil and gas industry, as they merge their respective oil and gas businesses Wintershall and DEA in a new joint venture, according to a company announcement.

The new joint venture will operate under the name Wintershall DEA.

"With Wintershall DEA we create the leading independent European exploration and production company with international operations in core regions. By combining the two German-based entities, BASF and LetterOne lay the basis for further profitable growth,” says Dr. Hans-Ulrich Engel, Vice Chairman of the Board of Executive Directors and Chief Financial Officer of BASF SE in the press release.

In the medium term, BASF and LetterOne envisage to list Wintershall DEA through an IPO.

Closing of the transaction is expected in the first half of 2019, subject to approvals of merger control and foreign investment authorities as well as mining authorities and the German Federal Network Agency. Until closing, Wintershall and DEA will continue to operate as independent companies.

In 2017, the combined business of Wintershall and DEA had pro-forma sales of EUR 4.7 billion, income from operations before depreciation and amortization (EBITDA) of EUR 2.8 billion and net income of EUR 740 million.

The companies expect synergies of at least EUR 200 million per year through the merger.

When and if the merger is approved, CEO at Wintershall Mario Mehren will be CEO at Wintershall DEA.

English Edit: Lisa Castey Hall Nielsen

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