An executive at one of the world's largest integrated oil companies ("Mobaco") is charged with deciding whether or not to make an investment in a large Russian natural gas company ("Gaprom"). An alliance between the two organizations is under consideration; however, as part of this deal, Mobaco must make a $1.2 billion cash investment in the Russian company. With the goal of a 15 return on investment, Mobaco management must take into account political and economic conditions - and some troubling inconsistencies in Gazprom's financial data that was making a reliable valuation difficult to achieve. Further complicating matters, Russian law prohibits foreigners from owning more than 9 of Gazprom - and with existing foreign ownership at approximately 4 and more foreign issues being contemplated, both Mobaco and Gazprom must be careful not to overstep the legal limit. In this case, students analyze Russian economic performance, Gazprom financials, and domestic and global gas consumption data in order to make an informed decision regarding this investment.
Case id: 080328
Supplemental Material: Teaching Note