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Shell, Koc to Bid Jointly for Turkish Refiner Tupras

BLOOMBERG: Shell, Koc to Bid Jointly for Turkish Refiner Tupras

“Royal Dutch Shell Plc is teaming up with Koc Holding AS, Turkey’s biggest company, to bid for 51 percent of Tupras Turkiye Petrol Rafinerileri AS, the nation’s state-run oil refiner, to expand output of oil products.”

Monday 29 August 2005

Aug. 29 (Bloomberg) — Royal Dutch Shell Plc is teaming up with Koc Holding AS, Turkey’s biggest company, to bid for 51 percent of Tupras Turkiye Petrol Rafinerileri AS, the nation’s state-run oil refiner, to expand output of oil products.

Shell, Europe’s second-biggest oil company, and Koc Holding will register their alliance with the Privatization Administration today, Koc said in a statement via the Istanbul Stock Exchange. Tupras has a market value of 5.28 billion liras ($3.9 billion), based on the today’s price. Shell and Koc are on a 13-company shortlist of possible bidders approved by the government in June.

“The Koc-Shell consortium looks quite a strong one but it’s not clear how aggressive they will be in the bidding,” said Ismail Erdem, head of research at Istanbul-based Finans Invest, Turkey’s largest brokerage house. “The price is going to be higher than the last time the government tried to sell the company, as the country’s economic outlook is much better now.”

Turkey is selling Tupras and other government businesses under an International Monetary Fund-backed plan to reduce inflation and debt, worth $10 billion in lending. Italy’s Eni SpA and Spain’s Repsol YPF SA, Europe’s fourth- and fifth-biggest oil companies respectively, have also expressed an interest in Tupras.

PKN Orlen SA, Poland’s largest oil company, will partner with Turkey’s Zorlu group in the auction, Zorlu said in a statement received by e-mail. Potential buyers must declare bidding alliances today and submit final offers by Sept. 2, the Privatization Administration has said.

Tupras shares fell 1.8 percent at midday on the Istanbul Stock Exchange, when the morning trading session ended, while the ISE National 100 index rose less than 0.1 percent. Tupras shares have added 12 percent in the past week on expectations the company would be sold for more than its market value.

Second Attempt

An attempt to sell Tupras failed last year when Turkish courts overruled a $1.3 billion sale to Zorlu and Russia’s OAO Tatneft, finding irregularities with the process.

The government’s ability to override opposition among unions and other groups to the sale of state assets including Tupras may determine whether the nation’s $300 billion economy can continue to attract investors, analysts have said.

“This time around it seems that the government is acting much more carefully in order to avoid legal challenges to the sale,” Erdem said.

Tupras, based in Izmit in northwestern Turkey, said on Aug. 23 that its second-quarter net income rose 54 percent to 250 million liras as higher demand for products such as gasoline widened its profit margins.

The company processed 12.4 million tons of crude oil in the first half, 8.1 percent more than a year earlier, as economic growth increased demand, Tupras said on July 4. Sales volume rose 7 percent to 11.9 million tons. Revenues from overseas sales almost doubled to $845 million.

http://www.bloomberg.com/apps/news?pid=10000085&sid=a1I0fLHC6D7A&refer=europe

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