OAO Uralkali gained for a second day after billionaire Mikhail Prokhorov’s Onexim Group was said to be among potential bidders for billionaire Suleiman Kerimov’s stake in the world’s biggest potash producer.
The stock erased earlier losses, rising as much as 1.6 percent and trading up 1.1 percent at 172.83 rubles by 3:24 p.m. in Moscow. The amount of shares trading was equivalent to about 49 percent of the three-month average. The company advanced 0.6 percent to $26.91 in London.
Prokhorov, who sold his 38 percent of Polyus Gold International Ltd. to associates of Kerimov in February, hasn’t made a formal offer, three people with direct knowledge of the matter said, asking not to be identified as the information is private. Kerimov is seeking a price based on a market value of more than $20 billion for the company as a whole, they said. That would be at least a 28 percent premium to today’s share price.
“We’re seeing stock volatility in response to reports about the ownership changes,” Denis Vorchik, an analyst at UralSib Capital, said by phone from Moscow. “Kerimov’s stake is being offered to different oligarchs.”
Russian entrepreneur Vladimir Kogan is also said to be seeking a stake in the company, according to people familiar with the situation.
Kerimov, who controls 33 percent in Uralkali with two business partners, began receiving offers from potential buyers after Belarus arrested Uralkali Chief Executive Officer Vladislav Baumgertner on Aug. 26, a month after he pulled out of the Belaruskali trading venture with Belarus that controlled 40 percent of the global exports of the crop nutrient.
Belaruskali won’t renew cooperation with Uralkali unless the Russian producer changes its strategy or owner, Belaruskali CEO Valery Kirienko said on Aug. 19. Belarus President Aleksandr Lukashenko said this month that he expects Russia to approach Belarus in an effort to restore cooperation in marketing potash.
“The market is hoping that if the ownership structure is changed, Uralkali will renew its cartel with Belaruskali and there’ll be better control over the potash price,” Vorchik said. “In reality, potash prices are unlikely to recover for some time now.”
Potash prices have fallen since Uralkali dropped the Belarus venture, with China’s domestic spot price sliding to $325 per ton from $350 per ton in July before the split, Oleg Petrov, chief of sales and marketing at Uralkali, said Sept. 10. Since exiting the joint venture, Uralkali has ramped up to maximum output, having run at an average 70 percent in 2012.
The yield on Uralkali’s bonds due April 2018 fell six basis points today to 4.711 percent, the lowest since July 25. Uralkali jumped as much as 3.9 percent yesterday after Chengdong Investment Corp., a unit of China Investment Corp., or CIC, exchanged bonds it holds in the world’s biggest potash producer for a 12.5 percent stake.
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