Sibur May Sell Tires, Fertilizers Before Share Sale

ZAO Sibur Holding, eastern Europe’s biggest petrochemical company, plans to sell its tire-making and fertilizer businesses before possibly offering shares in an initial public sale.

Sibur may build up its tire-producing company, allowing it to “exit” the operations, company President Dmitry Konov said today in London. The company is examining plans to set up joint ventures with Italy’s Pirelli & C SpA (PC) and Russian Technologies Corp. and a tie-up with oil producer OAO Tatneft’s tire maker. Sibur expects to make a decision on March 15, he said.

Russia’s economic growth, forecast at 4.2 percent this year, is luring carmakers back and encouraging expansion. The car market may grow as much as 35 percent to 2.4 million vehicles this year, PricewaterhouseCoopers LLP said Jan. 20. Russia had surpassed Germany as Europe’s biggest car market in the first half of 2008 before demand slumped during the financial crisis.

“We are trying to bring them together to see whether it can be one company with different shareholders or we should do something different,” Konov said about talks with Pirelli and Tatneft’s OAO Nizhnekamskshina. This is the “exit strategy.”

Talks on selling the company’s fertilizer unit to a foreign or Russian buyer may also be completed this year, Konov said. Demand for fertilizers is higher than for tires as food prices have risen, he said.

Considering IPO

“We have seen a very positive price dynamic for fertilizers in the last six months,” he said.

Russian billionaire Leonid Mikhelson plans to take over Moscow-based Sibur, possibly by the end of the year, said Pavel Malyi, head of ZAO Miracle, the businessman’s investment firm.

Mikhelson said in a Jan. 26 interview in Davos, Switzerland, that he is considering an initial public offering or attracting strategic partners for the petrochemicals producer.

“A company of Sibur’s statue and importance for the Russian economy logically should be public,” Malyi said, citing Mikhelson. “There is no particular rush.”

Mikhelson has Russian government approval to raise his stake to almost 50 percent in Sibur after acquiring a quarter of the company last year, Malyi said. OAO Gazprombank, which holds the other 50 percent, has agreed to sell its stake in the petrochemicals company to the billionaire.

Mikhelson, who also holds about 27 percent of OAO Novatek, Russia’s second-biggest natural-gas producer, doesn’t plan to combine Sibur assets with the gas company, Malyi said.

Sibur produces about 24 percent of Russia’s tires and about 16 percent of the country’s nitrogen fertilizers, according to a company presentation.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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