The companies said in a joint press release that SUEK, Russia's largest coal producer, would hold an additional issue of shares to give Gazprom's subsidiaries 50% plus one share in its equity capital in exchange for their energy shares.
The parties to the merger will apply to the anti-monopoly authority in the near future for permission to complete the deal, expected to go through before September.
After the merger, the SUEK board will comprise of 11 people, including five Gazprom representatives, four SUEK shareholders and two independent directors. A Gazprom official will become board chairman, while SUEK CEO Vladimir Rashevsky will be general director.
The company also plans to hold an initial public offering on international markets afterwards.
Gazprom and SUEK, which holds some 5.8 billion metric tons in proven coal reserves, signed a letter of intent to form a joint venture in February 2007. The head of the Federal Anti-Monopoly Service (FAS), Igor Artemyev, said at the time he was opposed to the deal. "It is monopolization, pure and simple."
He said Gazprom had no coal assets, but as a result of the deal would expand its dominant position not only on the natural gas market, but also the coal market in Siberia, the Urals and Russia's Far East.
Gazprom said previously that more coal should be used to generate electricity, while SUEK CEO Rashevsky said the effective use of coal in the power generating sector would help meet the existing power shortage.
Gazprom holds significant non-core assets, including in agricultural enterprises, banks, financial companies, media and sport clubs.
