Statoil to buy Norsk Hydro's oil and gas business for $30b

Oslo: Norway's Statoil has agreed to acquire the oil and gas activities of Norsk Hydro for about $30 billion, creating a national champion and the world's largest offshore operator.

"The recommended merger is driven by an ambition to grow in Norway and internationally," Norway's two biggest companies said in a joint statement, adding that the new company's output would be 1.9 million barrels per day in 2007, with proven oil and gas reserves of 6.3 billion barrels of oil equivalents.

Shares in Norsk Hydro leapt 23.5 per cent to 193.0 crowns, and Statoil stock was up nearly 3.5 per cent at 179.0 crowns by 1106 GMT, driving the Oslo bourse benchmark index to new all-time highs.

Statoil and Norsk Hydro have most of their assets off Norway in the North Sea, but have sought growth abroad in areas from the Gulf of Mexico to the Middle East, and from the Caspian Sea to Africa and Latin America.

The bigger scale should enable them to compete more effectively in a world where international oil companies face ever tougher competition for access to oil and gas resources.

The proposed merger is subject to approval by the general shareholder meetings of the two companies and by regulatory authorities, they said.

Norsk Hydro, the energy and aluminium group, will continue as a focused, global aluminium company, Hydro said.

Hydro shareholders will get 32.7 per cent, and Statoil's shareholders 67.3 per cent of the new company.

"Hydro's shareholders will receive 0.8622 share in the new company for each Hydro share and continue as owners of Hydro.

Statoil shareholders will maintain their holdings in the new company on a one-for-one basis," the companies said.

Based on the exchange ratio and the current share prices, the new company would have a market capitalisation of roughly 575 billion Norwegian crowns ($92.28 billion).