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MOSCOW, Russia (Reuters) -- Russian oil firm Sibneft suspended its merger with partner YUKOS on Friday, raising fresh doubts over the landmark post-Soviet deal that has been dogged by pre-election political controversy.
The announcement, shortly after the start of a joint shareholders' meeting to elect board members to the newly-merged company, stunned financial markets in Moscow and abroad, and sent YUKOS shares crashing by more than six percent.
"The completion of a merger between YUKOS and Sibneft is suspended due to a mutual agreement reached between the core
shareholders of both companies," Sibneft said in a statement.
No explanation was given for the suspension of a deal in which a majority stake in Sibneft is already in the hands of YUKOS shareholders in exchange for shares plus $3 billion in cash.
A spokesman for YUKOS later said the statement was not a joint statement, causing further confusion.
Last month YUKOS's main shareholder and then chief executive Mikhail Khodorkovsky was arrested on charges of tax evasion and
fraud. He remains in jail and has quit his post.
Khodorkovsky was supporting opposition parties ahead of upcoming Russian presidential and legislative elections.
President Vladimir Putin's crackdown on him and other wealthy businessmen who emerged in the privatization era of the 1990s has proved popular with the Russian electorate.
Some stockbrokers said they suspected Roman Abramovich, the oil tycoon who recently bought English soccer club Chelsea and is a big Sibneft shareholder, wants to renegotiate the deal.
"As far as the market is concerned this is a done deal. The announcement doesn't make sense. At the end of the day people will assume sinister motives until it's clarified," said Chris Weafer, a chief strategist at Alfa-Bank.
"Obviously people will assume... Abramovich is trying to change the terms at the last minute," he added.
Others simply expressed dismay that the
deal, which aims to create the world's fourth largest oil company and by far Russia's biggest private commercial enterprise, had been suspended.
A Russian broker in London said suspension could open the way for western oil firms already eager to exploit Russia's energy riches to step in. U.S. giant Exxon Mobil was holding talks with Yukos about buying a state when Khodorkovsky was arrested.
The arrest spread panic among financial markets, who feared that the government was launching a broadside against big business that could lead to controversial privatisations conducted in the 1990s being revoked.
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