Bob Dudley needs to excuse himself from any discussions regarding the fate of TNK-BP.
Yes, a risky move. But one I think is vital if the Mississippi native wants to get the company out of the mess he's helped to create in Russia. The scars of the BP boss and his Russian partners run far too deep for him to be involved in the negotiations.
To recap: in January BP announced a $10bn share swap and $2bn Arctic exploration deal with Russian state-owned Rosneft. This angered the billionaires behind Alfa-Access-Renova (AAR), the Russian conglomerate that co-owns BP's existing joint venture in the country, TNK-BP. They claimed that the tie-up violated the TNK-BP shareholders' agreement, which gives AAR first refusal on BP's dealings in Russia.
AAR won an injunction against the deal, while BP and Rosneft extended the deadline to formalise their agreement to 16 May. BP is trying to buy AAR out of TNK-BP and one of the oligarchs, Viktor Vekselberg, said in a BBC interview last week that they might sell up if the price is right. This would be considerably more than the £16.4bn BP has already offered and was turned down.
All that would be quite enough corporate saga, but the history between Dudley and AAR makes this an even nastier tale. In 2008, Dudley was hounded out of Russia when he was chief executive of TNK-BP. At the time, he was accused of favouring BP in the joint venture.
True or not, I think the way Dudley was treated was deplorable: there have been reports of bugged offices, police raids and visa problems. Dudley is a cool customer, but his words in January were laughable. "I have never regarded my experience at TNK-BP as anything other than an extended business discussion." Well, much of that must have taken place from Bermuda, France and the Netherlands – three countries from where Dudley tried to run TNK-BP after visa problems forced him out of Russia.
Given the scale of TNK-BP – last week's first-quarter results saw BP earn more than $1.5bn in pre-tax and interest profit from the venture – I foolishly dismissed talk that Dudley would take over from Tony Hayward in the wake of the Deepwater Horizon disaster. I couldn't see how that relationship could possibly be rebuilt.
I hoped Dudley might take a stand and threaten to turn down the job unless a formal apology was made. However, the spin from BP and the Russians was that AAR had welcomed its old adversary back with open arms.
Dudley's decision to pursue the Rosneft deal has reopened those scars. In his interview, Vekselberg said he was "upset" and added: "Please, take note of this: I'm not surprised they [BP] wished to violate our agreements. I am surprised they dared do that in the end. Without any consultation with us, without even letting us know."
Those are the words of someone for whom negotiations have turned personal. The Russian oligarchs believe that Dudley has personally wronged them twice and they will inevitably factor that into their sale price.
If Dudley wants to get AAR out of TNK-BP for a reasonable amount of dough, there is no room for emotion. Which means that there is no room for him at the negotiating table.
Merry month of May is going to be busy for the money-makers
Hold on to your hats – the business world's going to have an action-packed May. OK, April was hardly dull, despite the low share trading volumes caused by the seemingly endless number of bank holidays.
Just last week, there were Office for National Statistics figures showing a stagnant economy, anger over £85m of payments made to Barclays bankers managing toxic assets, while retailer All Saints closed in on a salvation deal.
This month, though, should define 2011. The long-mooted $60bn flotation of commodities trader Xstrata is due this month, opening up one of the more secretive giants of world industry to constant market scrutiny and speculation.
The Secretary of State for Culture, Jeremy Hunt (left), should finally clear News Corporation's 700p-a-share for the 61 per cent of BSkyB that Rupert Murdoch's media empire does not already own. Not that this is a done deal: shareholders might well hold out for more money given that BSkyB reported last week annual revenue was up 12.8 per cent to £1.65bn.
After a decade of on and off sale processes, we will finally have a private-sector owner of state-owned bookmaker the Tote. Betfred is said to be odds-on, though it faces stiff competition from a group featuring the City heavyweights Sir Martin Broughton, the British Airways chairman, and Andy Stewart, the founder of stockbroker Cenkos Securities.
And it will be crunch time for interest rates. Will the Monetary Policy Committee finally raise interest rates? Probably not, though economists will squabble over whether or not this was a chance missed to get the economy under control.
Message to the City: rest up tomorrow. You'll need your energy.
Fighting fit: Virgin Active goes for the burn with Esporta
It's good to see a buy-and-build strategy, rather than a takeover driven by "synergies" – that horrible word that really means job cuts. Gym chain Virgin Active has snapped up Esporta in a £77.6m deal. There will be no redundancies in the clubs. Virgin Active is keen on a flotation one day, and by building up the business into the UK market leader the group will achieve a far greater initial share price. Esporta's struggles have meant that the chain has had little investment recently, so Virgin Active will plough money into the business. Hopefully, when a strong listing price is achieved, this will help prove that buying and building businesses is a far more effective way to grow than cynical financial engineering.
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