Billionaire Mikhail Prokhorov’s Onexim Group isn’t interested in merging PAO Uralkali, the world’s largest potash producer, with fellow shareholder OAO Uralchem, three people familiar with the situation said after a report of a potential tie-up.
There’s no sense in tying up the two companies as fertilizer producer Uralchem’s about $4 billion of debt would dilute the value of Uralkali, said one person with knowledge of shareholder plans and two people that work with both companies. All three asked not to be identified as the information is confidential.
Uralchem’s co-owner Dmitry Mazepin isn’t against a deal and may try to initiate merger talks in the future, a fourth person said, also asking not to be identified.
Uralkali spent $1.12 billion this month buying back an 11.98 percent stake from shareholders, including Onexim. The potash producer said in April it may delist from the London Stock Exchange after the buyback, pending a board decision. That’s still a possibility, the people said.
“The idea of merging the two companies is really bad,” said Oleg Petropavlovskiy, a BCS Financial analyst. “Instead of the one troubled company and the one quite healthy, it will create something in the middle, while there is no operational synergy between the two. It will only be attractive for Uralchem as it may help to negotiate better refinancing.”
A merger is impossible without Onexim’s support, he said.
Onexim and Uralchem each hold about 20 percent of Uralkali. Their stakes may increase if Uralkali cancels stock held in treasury.
Uralkali rose 0.6 percent to 150.35 rubles by 2:11 p.m. in Moscow.
Uralchem may want to take the company private and later merge with it, AO Raiffeisenbank analysts in Moscow said last month. The Vedomosti newspaper reported Monday that a delisting may happen before the end of the year, followed by a merger with Uralchem. The press services of Uralchem, Onexim and Uralkali declined to comment.