[Editor's note: This story was updated at 8:30 a.m. CST Sept. 28.]

Chemicals group BASF and LetterOne signed a merger agreement to combine their respective oil and gas businesses Wintershall and DEA to create an independent European oil and gas company, the companies said Sept. 27.

The new company called Wintershall DEA will be headquartered in Kassel and Hamburg and will seek to list itself through an IPO, BASF said.

Under the deal, LetterOne will put all its shares in a vehicle of Russian billionaire Mikhail Fridman's DEA into Wintershall Holding GmbH against the issuance of new shares of the company to LetterOne.

BASF will initially hold 67% and LetterOne 33% of Wintershall DEA's ordinary shares.

The Joint Venture will aim for daily production of 750,000 to 800,000 barrels of oil equivalent between 2021 and 2023 and is expecting synergies of at least 200 million euros (US$232.80 million) per year are expected as of the third year following the closing of the transaction.

The new independent company will be led by the CEO of Wintershall, Mario Mehran and Maria Moraeus Hanssen, CEO of DEA, will be the deputy CEO and COO of the joint venture.

Closing is subject to regulatory approvals and is expected in the first half of 2019. (US$1 = 0.8591 euros)