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Mergers & Acquisitions

Berlin approves sale of RWE oil and gas unit to Russia

The German government has given the green light to the sale of RWE's oil and gas unit to a Russian-led consortium. Berlin doesn't expect supply disruptions following the sale, despite tensions with Moscow over Ukraine.

The German Economics Ministry said Friday it didn't object to the purchase of gas and oil subsidiary DEA by a group of investors led by Russian business tycoon Mikhail Fridman.

A senior ministry official, Stefan Kapferer, told news agency Reuters that Berlin didn't expect any disruptions in the supply of gas and oil in the wake of the deal.

In addition, a spokesman for the LetterOne investor consortium said it had received permission from Germany for the transaction to go ahead.

In March, the Luxemburg-based consortium announced it would offer to buy DEA, the oil and gas subsidiary of German utility giant RWE, for 5.1 billion euros ($6.9 billion). The deal has been criticized in Germany amid tensions between Russia and Western nations over the crisis in Ukraine.

Theoretically, the German government has the right to block any takeovers it thinks will threaten public safety and order. RWE, which has already received anti-trust approval from the EU, said it expected the transaction to be finished by the end of the year.

Germany's energy companies in crisis

DEA owns exploration and extraction licenses in the Middle East and North Africa, as well as in several European countries, including Germany, Great Britain, Norway and Denmark.

RWE has sold off the unit to reduce its 30-billion-euro debt burden. The German utility is suffering losses as a result of the country's shift to renewable forms of energy generation.

LetterOne was founded in 2013 by Russian billionaire investor Mikhail Fridman. The consortium includes oil and gas unit L1 Energy and telecoms unit LetterOne Telecom. L1 Energy is co-funded by another Russian billionaire, German Khan, who plans to invest $20 billion in oil and gas projects worldwide.

uhe/el (Reuters, dpa)

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