Total's Novatek plan takes hit
French giant Total's plan to take a stake in Russian gas producer Novatek in a $1 billion deal has taken a double hit after Novatek demanded more cash and Moscow's Federal Anti-Monopoly Service denied clearing the deal.
Last year, Total announced that it was buying 25% plus one share - a blocking stake - in Novatek.
But the deal has been bogged down in a review by the anti-monopoly service, which has said it is waiting for Novatek to finish a corporate restructuring before making its decision.
On Friday, a spokesman for Novatek, which doubled its profits in the first nine months of 2004 over the same period in 2003, said the company now wants a bigger price for the stakeholding.
"We are not currently holding talks with Total, but when they resume we will ask them for a price upgrade due to positive changes in our company since a preliminary deal was signed," Novatek spokesman Mikhail Lozovoy told the Moscow Times.
"We have implemented a major consolidation and think the company is worth more now," said Lozovoy. He declined to disclose other details.
Inessa Varshavskaya, Total's vice president for business development in Russia, said: "We are still waiting for the anti-trust body to approve the deal, because we see no reason why it shouldn't be approved and do not understand how Novatek's restructuring could be linked to this transaction."
Total is in regular contact with Novatek but has not received any request from the company for a price upgrade so far, she said.
Since the announcement of Total's investment, a small number of Novatek shares have begun trading on the MICEX, and the price has risen from around 30,000 rubles ($1090) in December to 35,500 rubles on Friday.
Total appeared to get a glimmer of hope for final approval for the deal after Interfax reported Friday that the anti-monopoly service had recommended that the government allow the investment to go ahead.
But the head of the service, Igor Artemyev, scotched the Interfax report.
"I deny that information," he told reporters. "There has been no decision."
Artemyev said the agency's decision was likely to come in mid-April, in line with its previous pronouncements.
The approval process for the deal, announced in September, has taken much longer than the usual couple of months.
Interfax reported last month that French President Jacques Chirac had sent a letter to President Vladimir Putin, asking him to expedite approval of the Novatek deal.
Putin and Chirac will meet in Paris this week, and Total shareholders are likely to watch keenly for any sign of a political push for the seemingly stalled investment.