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Gazprom overtakes GE as world's fourth-largest firm
Gazprom overtook General Electric (GE) as the world's fourth-largest company by market value after its chairman, Dmitry Medvedev, became Russia's president.
- Bloomberg
- Published: 00:43 May 9, 2008
Moscow: Gazprom overtook General Electric (GE) as the world's fourth-largest company by market value after its chairman, Dmitry Medvedev, became Russia's president.
State-run Gazprom, the world's biggest natural-gas producer, advanced 30 per cent in Moscow trading in the 12 months through Wednesday as energy prices rallied, valuing the company at 7.8 trillion roubles ($327 billion). Fairfield, Connecticut-based GE declined 13 per cent to $325 billion in the period.
"It's only natural that a company that owns about a fifth of the world's natural gas reserves is going to increase in value," Steven Dashevsky, managing director of equities at UniCredit Aton, said by phone from Moscow Wednesday.
"It's reasonable to assume that Gazprom will continue to enjoy fav-ourable regulatory treatment with Medvedev in the Kremlin."
Medvedev, 42, became Russia's third and youngest president Wednesday, following his mentor, Vlad-imir Putin. That helped lift Gazprom's shares 4.3 per cent, the most in more than three months.
Expansion trail
During Medvedev's six-year tenure, Gazprom's market value climbed more than 32-fold as fuel prices rose and the company expanded into oil, electricity and coal.
Medvedev will quit as Gazprom's chairman next month after a new board is elected, company spokes-man Sergei Kupriyanov said yesterday.
Deputy Chief Executive Officer Alexander Med-vedev, 51, said in a Moscow interview last year that Gazprom, which has a quarter of Europe's gas market, expects to be the world's biggest company and reach $1 trillion in value as soon as 2014. The two Medvedevs aren't related.
All 16 analysts whose Gazprom recommendations are compiled by Bloomberg have a "buy" or equivalent recommendation on the stock. The average price estimate is $19.66 (470 rubles), or 42 per cent more than yesterday's close.
ExxonMobil Corp., at $476 billion, is the world's biggest most valuable company, followed by Petro-China Co., China's largest oil producer, at $441 billion and China Mobile Ltd. at $341 billion.
"In the era of scarce global natural resources, companies with significant reserves access are going to end up among the most valuable in the world," Dashevsky said.
GE stunned investors on April 11 when CEO Jeffrey Immelt said 2008 earnings will fall short of his previous forecast and first-quarter profit dropped at four of its six biggest units.
The world's largest maker of locomotives and jet engines retreated the most in 20 years that day. Immelt blamed the results on weakening credit markets.
The collapse of the US subprime mortgages market last year and the ensuing credit contraction saddled the world's largest financial institutions with $290 billion of writedowns and losses.
GE on April 23 raised its cost-cutting goal by 50 per cent and said it will sell underperforming units.
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