The billionaire owners of Polyus Gold International Ltd. and Polymetal International Plc (POLY) are considering merging the Russian gold miners as Polyus seeks a primary listing in London, two people with knowledge of the matter said.
Any deal may be about $6.9 billion, based on the current value of Polymetal on the London Stock Exchange. Polyus has a market value of about $10 billion. The talks have been between the owners of the companies and not management, the people said, declining to be identified until a decision on whether to pursue the negotiations on combination is made.
Polymetal “confirms that it is not engaged in any discussions with Polyus” on a merger, it said in a statement.
A tie-up with FTSE 100-member Polymetal would allow Jersey- based Polyus, 78 percent-controlled by billionaires Mikhail Prokhorov and Suleiman Kerimov, to gain the same listing, which has been delayed by a Russian commission headed by Prime Minister Vladimir Putin. Prokhorov and Putin are both running for the presidency in March elections.
Polyus advanced as much as 11 percent in London trading to $3.55, the highest in four months. Polymetal jumped 10 percent to 1,176 pence, the highest since its October market debut.
Anton Arens, a Polyus spokesman, declined to comment, as did Andrey Belyak, a spokesman for Prokhorov’s Onexim Group, and Anton Averin, Kerimov’s Nafta Moskva spokesman.
“A combination could allow Polyus not only to gain a London primary listing, but also access to Polymetal’s experience in building new mines,” Dmitry Kolomytsyn, a Morgan Stanley analyst, said by phone from Moscow. Polymetal would benefit from access to Polyus’s “huge resources,” he said.
A merger may also establish a combined company ranking ninth among the world’s biggest gold producers, overtaking Phoenix-based Freeport-McMoRan Coper & Gold Inc., according to Bloomberg News calculations from data provided by London-based researcher GFMS Ltd.
Polymetal, whose owners include Czech billionaire Petr Kellner and Russia’s Alexander Nesis, switched its domicile from Russia to Jersey last year and secured a primary listing in October. The company was included in the FTSE 100 index last month. Nesis’s also press office declined to comment.
Polyus has sought an international merger that would make it one of the largest-ranking gold producers since 2010. Talks on such a transaction were suspended until the redomiciling process is completed, management said in October.
Polymetal may be less interested in a deal than Polyus, as it is already in the FTSE 100 index, said Dmitry Smolin, an analyst at Uralsib Capital. “An international merger would be more appropriate for Polyus.”
Polyus picked Bank of America Merrill Lynch, JPMorgan Chase & Co. (JPM), VTB Capital and Renaissance Capital to arrange a London share sale to boost its free-float so that it can qualify for inclusion in the benchmark index, people with the knowledge of the matter said earlier this week. An agreement to combine with Polymetal may remove the need for that transaction.
Polyus traded up 1.6 percent at $3.25 at 4:05 p.m. Polymetal traded up 3.8 percent at 1,110 pence.
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