A leaner firm already looks like a better takeover target than its rebellious Russian oil subsidiary

 
Marion Dakers
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ref="http://www.cityam.com/company/bp">BP has been saying for years that it wants to be a smaller, leaner firm.

Lopping off its occasionally combative but always lucrative Russian arm is nevertheless a radical way to streamline.

TNK-BP accounted for 29 per cent of BP’s production and 16 per cent of its 2011 profits. And when its “noisy, not dysfunctional” board (Bob Dudley’s words) manages to agree, the dividend haul has been huge – around $19bn since its formation in 2003, compared to BP’s initial investment of $8bn.

BP’s 50 per cent stake in TNK-BP could be worth as much as $30bn – representing a quarter of the British firm’s market cap (or enough to pay for the 2012 Olympic Games, twice over).

But analysts have welcomed such drastic surgery. In the short term, it means investors are in line for a huge payout from the proceeds.

And after years of boardroom fights, threats and police raids, many market watchers increasingly see the feisty Russian unit as a risk factor instead of a cash machine.

Which begs two questions – firstly, whether anyone is capable of or willing to run the buccaneering business, besides similarly gung-ho Russian ventures such as Rosneft or Gazprom.

Secondly, with a board still dawdling over a long-term growth strategy, will the new, leaner BP attract takeover interest of its own?

Once its Gulf lawsuits and asset sales are out of the way, BP could well make a more attractive target than its wayward Russian subsidiary.