Deals of the Year: Emerging Europe
Best M&A deal
BP's merger with TNK
Deal size: $9 billion
Date: February 2003
Arrangers: Merrill Lynch, Morgan Stanley, UFG, Alfa Bank, Goldman SachsRussia could not have asked for a better start to 2003 than the announcement of BP's $9 billion merger with TNK in February. The eyes of the business world turned to Russia, which only five years earlier had defaulted on its debt. The deal seemed to symbolize the return of the federation's economy to normality.
Two months later, at the Russian Economic Forum in London, the buzz was still palpable. The conference was packed with foreign investors, politicians and journalists, all eager to find out more about Putin's Russia and what the next deal would be. As Ben Morgan, managing director of UFG, remembers: "Suddenly there was a real degree of urgency in people's analysis of Russia."
That dissipated somewhat with the arrest of Mikhail Khordorkovsky, majority shareholder of Yukos, in late 2003, and with concerns about Putin's authoritarian leaning. But 2003 was still a great year for Russia's capital markets, in terms of bond issuance, ratings upgrades and market perception, and the BP-TNK deal was an important component of that.