PAO Uralkali said investors tendered 11.89 percent of shares in its buyback program, less than the amount sought by the world’s largest potash producer.
The tender offer won’t be satisfied on a pro-rata basis, the company said Monday in a statement, meaning all the offered shares will be bought. The result, which falls short of a plan to repurchase as much as 15.97 percent of shares, will see Uralkali buy $1.12 billion of stock rather than $1.5 billion.
The Russian producer announced the buyback in April at $3.20 a share, or $16 per global depositary receipt, held through Cyprus-based unit Enterpro Services. The plan surprised investors since Uralkali intends to spend 300 billion rubles ($6 billion) to help compensate for lost output at a flooded mine.
Billionaire Mikhail Prokhorov’s Onexim Group, one of the company’s two biggest owners, declined to disclose how much stock it tendered. The 27 percent holder will have more than a blocking stake after Uralkali cancels all treasury shares, spokesman Andrey Belyak said. OAO Uralchem, which owns 20 percent, said this month it wouldn’t tender shares.
“If the main shareholders sought for Uralkali to repurchase as much of the free float as possible, the buyback didn’t reach the target,” Kirill Chuyko, BCS Financial Group’s chief of equity research, said by phone from Moscow. “The fact that Onexim Group, the largest co-owner, has not tendered a big stake, leaving a chance for minorities to exit, didn’t help.”
Analysts have suggested the buyback could be connected to a plan by Uralkali to give up its London listing following a reduction of its free float, or publicly available shares.
Konstantin Yuminov of AO Raiffeisenbank said last week that Uralkali may go private if enough minority investors tender stock. Sberbank CIB also said the buyback may be a step toward shareholders consolidating control and potentially delisting.
Uralkali said in April that the buyback could pose a risk to its London listing if the free float fell below 25 percent. The company, which had a 27.8 percent float at the time, had planned to repurchase stock on a pro-rata basis, only buying in full where the owners held 500 shares or less.
Failure to achieve the desired 15.97 percent stake raises questions about why the buyback was organized, BCS’s Chuyko said.
“It may delist shares from the London exchange anyway as such a decision requires only the will of the owners,” he said. “Still, with a large number of minorities left, it may be more painful.”
Uralkali has said it will pay for common shares at a rate of 49.7901 per $1. The Berezniki-based company plans to complete the repurchase by June 16.
Uralkali shares rose as much as 3.3 percent to 160.45 rubles, the highest intraday price in a month, and traded up 2.4 percent at 5:30 p.m. in Moscow. The GDRs climbed 3 percent in London.