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Mexico's Pemex prepares to sell Repsol stake - report

Published 05/05/2014, 14:21
Updated 05/05/2014, 15:16
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By Jose Elías Rodríguez and Tracy Rucinski

MADRID (Reuters) - Mexican state-run oil company Pemex [PEMX.UL] is preparing to sell its 9.3 percent stake in Spain's Repsol (MC:REP), according to a media report on Monday, after the appointment of a new chief executive further soured relations between the two firms.

Pemex, Repsol's third-biggest stakeholder and a long-time investor in the group, has hired Credit Agricole (PA:CAGR) to handle the sale, Spanish online newspaper El Confidencial said, citing financial sources. At current market prices, the stake is worth 2.3 billion euros (1.89 billion pounds).

Pemex and Credit Agricole declined to comment.

Pemex has had an increasingly fractious relationship with Repsol in recent years, marred by disagreements over how the Spanish group handled the loss of a unit in Argentina and the degree of influence it has allowed its Mexican partner.

Last week, Pemex voted against the appointment of Josu Jon Imaz in the new role of chief executive, a source close familiar with the board decision has said.

Pemex, which has clashed publicly with Chairman Antonio Brufau over his leadership style and strategy, had been pushing hard for a deputy in an attempt to increase its influence over the company's strategy. But the appointment of Imaz, who is considered a close confidante of Brufau, has failed to satisfy the Mexican firm.

The move effectively leaves executive powers in the hands of Chairman Antonio Brufau while delegating oversight of the company's key divisions to Imaz.

Pemex was losing patience and weighing an exit as a result, two sources familiar with the situation said.

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Repsol said on Saturday Imaz's appointment had received the backing of 15 out of 16 board members. The company declined to comment further on Monday.

An Repsol exit would allow Pemex to raise some cash at a time when Mexico is opening up its oil and gas sector to foreign investors, a major game changer for the company which has said it wants to take advantage of that to expand its foreign presence.

Pemex said in December it could potentially team up with Repsol for this expansion, and had hoped it could patch up the partnership.

Repsol shares were 1 percent lower at 1047 GMT on Monday.

CONFLICT END?

Pemex's departure could have some benefits for Repsol, some analysts said, as it would lift some of the uncertainty over the firms' embittered relationship.

"The final departure of Pemex would put an end to the divestment risk of this shareholder ... and to the conflicts in the board of directors," analysts at Banco Sabadell said in a note to clients.

El Confidencial said Pemex could sell its Repsol holding in several stages, including a market offering. Companies usually hire more than one bank to handle such sales.

Spanish newspaper Expansion also reported on Monday that businessman Juan Miguel Villar Mir, chairman of Spanish infrastructure company OHL (MC:OHL), had offered to take a large stake in Repsol if any shareholders sold out.

A spokesman for Grupo Villar Mir, a holding company comprising the businessman's OHL stake as well as his energy and property interests, denied the report.

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"There has been no contact or conversation over taking a stake in Repsol," the spokesman said.

Spanish bank La Caixa (MC:CABK) is Repsol's biggest shareholder, with about 12 percent.

(Additional reporting by Tomas Cobos in Madrid, with Matthieu Protard and Blaise Robinson in Paris; Writing by Sarah White; Editing by Erica Billingham)

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