La Caixa said on Friday it was talking to Russia's LUKOIL about a possible sale of part of its stake in Repsol YPF, a deal that could put a large chunk of Spain's biggest oil producer in Russian hands.
A financial source with close ties to LUKOIL said Russia's No.2 oil producer is interested in buying a large stake in Repsol and has been holding talks about a possible purchase for the past four years.
La Caixa, whose holding company Criteria owns 14 percent of Repsol, said any sale hinged on Spanish builder Sacyr Vallehermoso agreeing to sell its 20 percent stake in Repsol to LUKOIL.
The Spanish savings bank is discussing the sale of around 6 percent of Repsol, a source familiar with the talks said, which the Russian producer hoped to add to Sacyr's 20 percent and 2 percent from insurer Mutua Madrilena.
Shares in Sacyr, Criteria and Repsol all moved higher on the news of the talks, though analysts questioned whether LUKOIL would be able to raise financing for a deal of that scale.
Sacyr was 9.8 percent higher at 8.1 euros at 1313 GMT as the prospect of offloading its Repsol stake to relieve its stretched balance sheet pleased investors. Criteria was 9.4 percent higher and Repsol was 4.9 percent higher at 14.3 euros.
LUKOIL, 20 percent owned by U.S. oil major ConocoPhillips, was 3.31 percent lower at 798 roubles.
LUKOIL declined to comment on the matter. Repsol said it was not aware of any share sales. Mutua Madrilena has declined to comment.
A stakebuild in Repsol would go a long way toward advancing LUKOIL's long-held desire to establish a material refining presence in Western Europe.
Although both Spain and Repsol have said they want Repsol to remain independent and Spanish, Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Thursday he would respect the independence and public-listed status of both LUKOIL and Repsol.
Spain wants Repsol to have Spanish management and act as a guarantor for Spain's energy supply, Deputy Prime Minister Maria Teresa Fernandez de la Vega said on Friday, at the government's weekly press conference.
FINANCING IN QUESTION
Analysts on Friday cast doubt on how LUKOIL would raise the financing for any deal.
La Caixa did not mention any possible sale price, but Spanish press reports speculated on sale prices as high as 30 euros per share — more than double Repsol's current price.
One Madrid-based trader said 30 euros per share seemed excessive. Sacyr paid 26.7 euros per share for its stake in 2006.
At 30 euros per share, 30 percent of Repsol is worth around 11.25 billion euros ($14.09 billion).
ING said it estimated a 29.9 percent stake might cost $6 billion to $10 billion.
"In our view, LUKOIL cannot afford to pay anywhere close to $10 billion on its own," said analyst Igor Kurinnyy, saying he expected LUKOIL to turn free cashflow negative in the fourth quarter.
LUKOIL also made a big purchase earlier this year, agreeing a 1.35 billion euro ($1.7 billion) deal in June to buy 49 percent in Italian refiner ERG's Isab di Priolo refinery in Sicily, which was finalised earlier this month.
La Caixa said it could be involved in the financing of any deal and would meet banks on Friday to discuss possible financing.
Sacyr Vallehermoso put its Repsol stake up for sale in September, amongst other assets, as it struggles with a falling property market and massive debt.
However, a sale of the stake would deprive Sacyr of dividend payments from Repsol, which have acted to prop up Sacyr's profits as revenue from its property business declines.
It declined to comment on Friday. It has reiterated it is studying a possible sale of the stake and has held talks with potential buyers.
