Germany's BASF agrees oil merger with Russian tycoon's firm

German chemicals giant BASF has agreed to merge its Wintershall oil and gas unit with the DEA energy firm owned by Russia's billionaire entrepreneur Mikhail Fridman.

The multi-billion-euro deal will create "one of the largest independent European exploration and production companies" with "significant growth potential" and scope for synergies, BASF said in a statement late Thursday.

BASF said it would initially hold 67 percent of shares in the joint venture, which will go by the name Wintershall DEA.

The remaining shares will be held by the LetterOne group, Fridman's Luxembourg-based investment group which owns DEA.

There are plans for the new entity to be listed on the stock exchange "in the medium term", BASF added.

BASF and LetterOne signed a letter of intent to merge on Thursday and expect the deal to close in the second half of 2018, depending on regulatory approvals.

LetterOne purchased DEA, which specialises in oil and gas exploration and production, from German energy group RWE in 2015 for 5.1 billion euros ($6.0 billion).

At the time, BASF was also believed to be interested in snapping up the division.

Bloomberg news agency, citing sources familiar with the talks, last month said the merged enterprise would be valued at more than 10 billion euros.

Wintershall DEA will be headquartered in the German cities of Kassel and Hamburg, where the two companies are currently based.