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Uralkali Buyers Said to Seek Controlling Rights at Miner

OAO Uralkali Mine
A worker watches as excavated potash pours from the tunnel ceiling into an underground storage area at a potash mine, operated by OAO Uralkali in Berezniki, Russia. Photographer: Andrey Rudakov/Bloomberg

Billionaire Mikhail Prokhorov’s Onexim Group and billionaire Dmitry Mazepin are seeking a joint controlling stake in OAO Uralkali, the world’s largest potash producer, according to three people with knowledge of the plan.

Mazepin, who owns Russian fertilizer maker OAO Uralchem, is close to an agreement to buy about 20 percent of Uralkali from billionaire Suleiman Kerimov’s business partners, the people said, asking not to be named because the talks are private. Onexim said last week it agreed to buy a 21.75 percent stake from Kerimov’s charity foundation. After that sale, Kerimov will control a minority stake of about 5 percent that is now held by associates, the people said.

Onexim and Mazepin are set to have a majority as they’ll be able to vote a 12 percent stake that’s held by a unit of the Berezniki, Russia-based mining company. The shares narrowed losses and closed down 1.8 percent at 165 rubles in Moscow, giving Uralkali a market value of about $14.7 billion.

In July, Uralkali roiled the $20 billion market for the soil nutrient and sparked a dispute with Belarus by quitting a trading joint venture that controlled more than 40 percent of global potash exports. Uralkali Chief Executive Officer Vladislav Baumgertner was arrested in Minsk on Aug. 26 and charged with abuse of office as the chairman of the marketing company, while Belarus President Aleksandr Lukashenko called for a change of ownership at Uralkali.

Kremlin Courtesy

Talks with Belarus about a new joint trading venture may start as soon as the deal is closed, Elena Sakhnova, a VTB Capital analyst in Moscow, said by phone. “We see this deal as a courtesy to the Kremlin to resolve the situation with Belarus. While Prokhorov and Mazepin could have had influence over the company with a smaller stake, they probably want to be sure that they have full control.”

Russian President Vladimir Putin and Lukashenko discussed Uralkali at least twice since August, while saying Baumgertner’s case was in the hands of law enforcement officials. The CEO was extradited to Russia last week and is now in a Moscow jail, as his lawyer seeks his release.

Belarus-born Mazepin will buy 4.8 percent of Uralkali from Anatoly Skurov and 7 percent from Filaret Galchev, people said earlier this month. Mazepin will acquire an additional 8 percent that is now held by other partners of Kerimov, each of whom hold less than 5 percent, meaning they don’t have to disclose their holdings, the three people said today.

Skurov and Galchev were not available to comment. Alan Basiev, an Uralchem spokesman, declined to comment, as did Onexim’s press service and Anton Averin, a spokesman for Kerimov’s Nafta Moskva.

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