[Edaily Marketin YunJi Kim Reporter] An American billionaire has made an unexpected move in the race to acquire Russian oil assets—a target long coveted by global energy giants such as ExxonMobil and Chevron, as well as global private equity (PEF) firm Carlyle. His plan is to purchase shares of Russian companies—which have been sold at bargain prices due to Western sanctions—and exchange them for the companies’ overseas oil assets. As this unusual transaction method—which utilizes billions of dollars’ worth of frozen securities as payment—has emerged, it is drawing significant attention from the global mergers and acquisitions (M&A) industry.

According to investment banking (IB) industry sources on the 5th, a consortium led by U.S. billionaire investor Todd Boehly is pursuing a securities swap deal to acquire the overseas assets of Lukoil, Russia’s second-largest oil company.

Bowley is a billionaire investor known as a co-owner of the Los Angeles Dodgers of Major League Baseball and Chelsea FC of the English Premier League. For this acquisition bid, he has formed a consortium with Middle Eastern investors, including the United Arab Emirates’ (UAE) International Holding Company (IHC).

The Boehrle consortium is targeting Lukoil’s business assets—including oil fields, refineries, and gas stations—located in Europe, the Middle East, and Africa. More than 12 companies and investors, including ExxonMobil, Chevron, and Carlyle, have expressed interest in acquiring these assets, given their significant scale—crude oil produced by Lukoil’s overseas operations accounts for approximately 0.5% of global production. Among them, Carlyle even signed an acquisition agreement with Lukoil last January but halted the deal after failing to secure approval from the U.S. Treasury Department.

While Carlyle failed to clear the U.S. government’s approval hurdle, the Boehrle group has proposed an unconventional acquisition method. The plan involves purchasing Lukoil shares—whose trading has been blocked by Western sanctions—at a bargain price in lieu of cash and exchanging them for overseas energy assets. To this end, the bank representing the consortium has already purchased billions of dollars’ worth of Lukoil securities from Western investment funds and other sources. The purchase price is approximately 30 cents per share. While other bidders have been hampered by sanctions, the Boehringer group is effectively seeking to use shares—whose value has fallen due to sanctions—as a means of acquisition.

Russia’s invasion of Ukraine played a role in allowing Lukoil shares to trade at such a low price. Prior to the war, Lukoil was one of the major Russian stocks held by global investment funds; however, after the war broke out in 2022, Russian stocks were excluded from major emerging market stock indices and trading was restricted, leaving investors’ funds tied up for an extended period. What was a difficult-to-dispose-of asset for Western investors became a means for Boehrle’s team to secure large-scale oil assets.

However, U.S. sanctions against Russia remain a stumbling block even for the transaction structure proposed by Boehrle. Since the U.S. government allows negotiations for the sale of Lukoil’s overseas assets but restricts the flow of proceeds back to Russia, the acquirers must devise a transaction structure that complies with sanctions requirements. In fact, following the U.S. government’s decision to place Lukoil on its sanctions list last October, it also blocked a similar share-for-share swap deal proposed by other investors in December. The rationale was that even if shares were paid instead of cash, Lukoil would still derive economic benefits from the asset sale.

To overcome the U.S. government’s sanctions barriers, the Boehrle group has also tweaked the stock payment method. Instead of transferring the Lukoil shares—purchased at a bargain price—directly to the company, they have decided to hold them in a separate escrow account. The plan is to postpone the final disposition of the shares until after the sanctions are lifted, while first ensuring that Lukoil cannot access them in order to secure U.S. government approval.

Meanwhile, analysts in the capital markets say it remains to be seen whether Boehrle’s plan will actually materialize into a deal. Since it must be determined whether depositing the frozen shares into an escrow account complies with U.S. sanctions regulations, analysts suggest that the success of this transaction hinges not on the purchase price or financial strength, but on whether the U.S. government will accept the proposed transaction structure.