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Billionaires Buy Prokhorov’s Polyus Stake for $3.62 Billion

Two Russian billionaires bought Mikhail Prokhorov’s 37.8 percent stake in Polyus Gold International Ltd. (PGIL), the country’s largest producer of the metal, for $3.62 billion after winning approval from U.K. regulators.

Zelimkhan Mutsoev, a shareholder in potash producer OAO Uralkali, purchased 18.5 percent for $1.77 billion and Gavriil Yushvaev, the former owner of dairy and juice maker Wimm-Bill- Dann, acquired 19.3 percent for $1.85 billion, according to a statement today from Prokhorov’s holding company Onexim Group.

The buyers were proposed by billionaire Suleiman Kerimov’s Nafta Moskva investment firm, controlling 40 percent of Polyus, three people with knowledge of discussions said in January. They funded the deal with loans from state-run VTB Group, the people said, asking not to be identified as the matter was private.

“The businessmen avoided having to make a mandatory buyout to minority shareholders by acquiring the stakes separately,” Alexander Litvin, a TKB BNP Paribas Investment Partners analyst in St. Petersburg, said today by phone. Still, “we expect Polyus dividend payments may increase on this deal.”

Polyus climbed as much as 5 percent in London trading, the biggest intraday gain in four weeks, and advanced 0.9 percent to 221 pence as of 12:47 p.m.

Violent Crime

Yushvaev, 55, is ranked Russia’s 85th richest man by Forbes with a $1.2 billion fortune. The billionaire served nine years in a labor camp following a violent crime conviction in 1980, according to Wimm-Bill-Dann’s prospectus for its initial public offering. He made most of his wealth selling 19.6 percent of the dairy company to PepsiCo Inc. (PEP) in 2010 and is the founder of the Triniti car dealership.

Mutsoev, 53, a Russian parliament deputy since 1999, is ranked 66th richest in Russia by Forbes. He tied up with Kerimov in 2010 as OAO Silvinit and Uralkali agreed to merge to form the world’s largest potash maker. Mutsoev’s 8.37 percent in the combined company has a value of about $1.86 billion.

Wadge Holdings Ltd., jointly owned with Kerimov and other Uralkali partners, sold bonds in November to China’s CIC International Co. that are convertible into 12.5 percent of Uralkali.

Mutsoev made his fortune investing in assets such as the Pervouralsky pipe plant in the Urals, later sold to ChelPipe.

Prokhorov, a former Russian presidential candidate and the owner of the Brooklyn Nets basketball team, is shifting from commodities as he seeks to diversify his holdings. He still holds 17 percent of United Co. Rusal, the world’s biggest aluminum producer. Onexim may sell its Quadra Power Generation (TGKD) utility to an OAO Gazprom (GAZP) unit, Interfax said on Feb. 21, citing people familiar with the matter.

Rostelecom Report

“Polyus Gold has been one of Onexim Group’s major assets,” Chief Executive Officer Dmitry Razumov said today in a separate statement. Given “the balance between the company’s achievements and its potential, we made the decision that the time had come for Onexim Group to sell and realize its profit.”

The proceeds of the sale will be used for current and future investment projects, Onexim said. The group has held talks to buy 10.5 percent of Rostelecom from investor Konstantin Malofeev, Vedomosti reported this week, citing an unidentified banker and people close to the discussions.

The Polyus Gold stake had a value of about $3.85 billion based on yesterday’s closing price of 219 pence in London. The gold producer rose 15 percent from Jan. 14, after the three people said Prokhorov had reached an agreement with investors.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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