For the last couple of months, BP has been engaged in an ongoing battle with its Russian partners over control of TNK-BP – a row that worsened diplomatic relations between Britain and Russia and seemed certain to end in defeat for the oil giant. However, this morning it emerged that BP has breached the impasse: it’s agreed a compromise deal that concedes most of the Russians’ demands – but more importantly, allows BP to preserve its entire 50% stake in the lucrative business. Which sounds like a much better deal than anyone was expecting…
Not surprisingly, the deal does involve the departure of TNK-BP CEO Robert Dudley, who has received consistent backing from BP in the face of continued hostility from the four Russian oligarchs involved (in fact, they were so keen to get rid of him that they had his visa revoked by the government, forcing him to flee to a secret location in Eastern Europe Cold War-style). BP has agreed that his successor will be a fluent Russian speaker, although it does get to choose who that person is (as long as their choice is endorsed by the other shareholders.
There’s also going to be a shake-up at boardroom level, with the management committee reduced in size and the composition changed (as per the oligarchs’ request) so that three of the eleven directors are independents (though we can’t wait to see where they find these from…) – previously there were five from each side, which basically meant that they could never agree on anything. And they’ve also agreed to float up to 20% of the company at some stage, so that shareholders can cash out some of their chips. So the four oligarchs – Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik – have got all the key things they wanted.
On the other hand, BP has managed to keep hold of the most important thing, as far as its shareholders are concerned: a 50% stake in a thriving business that’s currently churning out about one-quarter of its oil and gas. During the row with the four powerful shareholders – particularly after the Russian government stuck its oar in – it looked inevitable that BP would ultimately be forced out by the Kremlin, so it could take control of BP’s half-share directly (we can’t imagine it’s terribly keen on those nasty Brits owning Russian assets).
So coming away with a deal like this – whatever the concessions – must mean that there’s been some pretty impressive negotiating by BP behind the scenes. ‘Most importantly, emotions were not allowed to prevail over common sense and both sides found the solution that best meets the interests of TNK-BP,’ Vekselberg said today. Let’s just hope this fragile peace lasts...
In today's bulletin:
BP waves white Russian flag
No boardroom equality for 73 years
The perils of flexible working
Verwaayen reappears at Alcatel-Lucent
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