A pair of Russian billionaires, one who made his fortune selling a dairy and juice business to PepsiCo Inc. (PEP) and the other an investor in potash producer OAO Uralkali, agreed to buy Mikhail Prokhorov’s stake in Polyus Gold International Ltd. (PGIL), two people with knowledge of the plan said.
Prokhorov’s 37.8 percent of Russia’s biggest gold producer will be split about equally between Gavriil Yushvayev, a former owner of Russia’s Wimm-Bill-Dann, and Uralkali shareholder Zelimkhan Mutsoyev, the people said, asking not to be identified because the talks are private. The stake is valued at about $4 billion based on yesterday’s price of 224.25 pence ($3.52) in London. Polyus has surged 16 percent since Jan. 14 and traded yesterday at the widest premium to peers since September.
Prokhorov’s Onexim Holdings Ltd. agreed to sell his shares in Polyus (PLZLY) as the billionaire former presidential candidate shifts away from commodities, three people familiar with the plan said last week. Onexim and the investors, selected by Nafta Moskva -- billionaire Suleiman Kerimov’s investment company -- sought approval from the U.K. Takeover Panel for the deal, the people said. Nafta Moskva owns 40.2 percent of Polyus.
“It’s good news for minority investors that Kerimov is behind the purchase as it means he may get to define Polyus’ strategy from now on,” Ilya Kravets, director of investment research at Daniloff Capital LLC in New York, where he helps manage $100 million of assets including Polyus’s London-listed stock, said by phone yesterday. “Kerimov means higher dividends and a higher stock price.”
Yushvayev, 55, agreed to sell a 19.6 percent stake in dairy-product and juice-maker Wimm-Bill-Dann to Purchase, New York-based PepsiCo in 2010 as part of the U.S. soft-drink producer’s $3.8 billion acquisition of 66 percent of the Moscow- based company.
Mutsoyev, 53, teamed up with Kerimov in 2010 when OAO Silvinit and Uralkali agreed to merge to form the world’s largest potash maker. His 8.37 percent in the combined company has a value of $1.9 billion based on yesterday’s London closing price. Wadge Holdings Ltd., which Mutsoyev jointly owns with Kerimov and other Uralkali partners, sold bonds in November to China’s CIC International Co. which are convertible into a 12.5 percent stake of Uralkali.
Polyus’s global depositary receipts increased 0.3 percent to a three-month high of $3.45 yesterday in New York. The 1.2 percent increase in London shares sent valuations to 13.03 times estimated earnings, compared with an average multiple of 12 for companies on the MSCI Emerging Markets Materials Index. (MXEF0MT) The 8.6 percent premium was the widest since Sept. 19.
The gold company’s London shares fell 1.6 percent to 220.75 pence by 1:17 p.m. in the U.K. capital today, declining for the first time in four days.
Press officials at Onexim and Nafta Moskva declined to comment when contacted about the stake sale.
Prokhorov, the 66th richest individual on the Bloomberg Billionaires Index with $14 billion, is selling industrial assets, while remaining in financial ventures. Onexim gained control of Renaissance Capital, a Moscow-based investment bank, from founder and shareholder Stephen Jennings in November.
Polyus produced 1.68 million ounces of refined gold last year, the most in its history, and this year plans to spend as much as $1.6 billion on projects, including its Natalka development.
JPMorgan Chase & Co. is advising on the Polyus sale, while VTB Group, Russia’s second-largest lender, will help fund the deal, the people said last week.
Onexim was considering an international merger before Prokhorov, who ran against President Vladimir Putin in March elections, decided to sell his stake. His company said Sept. 12 that it was in early talks with two potential buyers for holdings of less than 20 percent each in the producer.
The gold producer may increase dividends if Prokhorov sells out as new owners will need to serve debt they take to buy shares, Bank of America Merrill Lynch said Jan. 25.
The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. rose 0.2 percent to 104.79 yesterday, the highest level since April 12. Futures expiring in March on Moscow’s RTS Index fell 0.7 percent in Moscow today to 162,470.
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, was little changed at $30.93 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, increased 1.2 percent to 19.86 today.
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