Billionaire Mikhail Prokhorov’s Onexim Holdings Ltd. is looking at selling some or all of its $4 billion stake in Polyus Gold International Ltd., which may clear the way for a merger.
Onexim is holding preliminary talks with two potential buyers for stakes of less than 20 percent each in the London-listed gold producer, Prokhorov’s company said today.
Billionaire Suleiman Kerimov, whose Nafta Moskva holds 40.2 percent of Polyus, and Polymetal International Plc are involved in discussions, two people with knowledge of the matter said yesterday. Nafta Moskva said today it may back a buyer.
Russian commodities producers are considering tie-ups to compete globally. Kerimov helped create the world’s biggest potash producer in last year, merging OAO Uralkali with OAO Silvinit. Prokhorov said in 2010 that Polyus would seek to merge with a global miner to be top-three gold producer.
“The change in ownership should eventually open the opportunity for a future merger with Polymetal, something that has long been discussed,” Mikhail Stiskin, an analyst at Troika Dialog in Moscow, wrote in a note today, saying such a deal could be “uniquely synergistic” for both companies.
Polyus and Polymetal, part-owned by billionaire Alexander Nesis, gained primary listings in London to boost value and make the shares easier to sell or use in deals.
Prokhorov is the world’s 56th richest man according to the Bloomberg Billionaires Index, with a fortune estimated at $13.7 billion. About 40 percent, or as much as $5.64 billion, comes from commodities companies, including Onexim’s 37.8 percent of Polyus and stakes in United Co. Rusal and Intergeo.
“There is no certainty that Onexim will sell all, or any, of its interest in Polyus Gold,” Prokhorov’s company said.
If Prokhorov sells, the buyer will probably be a group of investors, rather than Kerimov himself, similar to the Uralkali transaction, Stiskin said. That “would bypass the need for an offer to minority shareholders.” Investors may benefit if a deal is financed with debt and Polyus pays a large dividend to help the buyer pay off borrowings, he said.
Another option under discussion is Prokhorov buying Kerimov out of Polyus, two people familiar with the matter said yesterday.
Kerimov’s Nafta Moskva is in talks on providing financial “or other” support to one of the potential purchasers of Onexim’s shares in Polyus, the company said today. Kerimov has agreed to borrow from state-run VTB Group to help buy the shares, Forbes Russia reported yesterday.
Prokhorov and Kerimov considered merging Polyus with Polymetal, two people with knowledge of the matter said in January. Polyus produced 721,000 ounces of gold in the first half of 2012, while Polymetal produced 501,000 ounces of gold equivalent, according to company reports.
The press offices of Polymetal and Nesis’s ICT Group said they weren’t holding talks on buying Polyus shares when contacted by Bloomberg News.
Polyus shares fell 0.1 percent by 3:56 p.m. in London, giving the company a market value of 6.5 billion pounds ($10.5 billion). Polymetal fell 0.4 percent, giving it a value of 3.88 billion pounds.
“With more agreement on strategy and potentially a more leveraged shareholder structure, it is in our view possible that discussions on a merger with Polymetal and a more flexible dividend policy could resurface,” said Erik Danemar, an analyst at Deutsche Bank AG in Moscow.