Prokhorov’s Onexim Said to Weigh Bid to Buy Uralkali Stake

Billionaire Mikhail Prokhorov’s Onexim Group is among potential bidders for Suleiman Kerimov and his partner’s stakes in potash producer OAO Uralkali, according to three people with direct knowledge of the matter.

Prokhorov, who sold his 38 percent of Polyus Gold International Ltd. to associates of Kerimov in February, hasn’t made a formal offer, the people 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 whole company, they said. That would be at least a 28 percent premium to today’s share price.

Kerimov, who with two business partners holds 33 percent of Uralkali, began receiving offers from potential buyers after Belarus arrested Chief Executive Officer Vladislav Baumgertner on Aug. 26, a month after the Russian company ended a trading venture that controlled 40 percent of global potash exports.

“Kerimov will find it difficult to demand a large premium for his stake as the market has completely changed since July after Uralkali quit the trading venture with Belarus,” Elena Sakhnova, a VTB Capital analyst, said by phone. “Even if the venture is restored, I don’t see how a buyer could recoup an investment at a premium.”

Onexim isn’t ready to pay the price Kerimov is asking, the people said.

Cash Available

Uralkali climbed 2.1 percent to 174.65 rubles by the close in Moscow, giving it a market value of $16 billion. The shares plummeted 19 percent on July 30 when Uralkali exited the Belarusian Potash Co. venture and said it would ramp up output of the crop nutrient, eroding potash prices. The stock remains

6.7 percent lower than the July 29 close in Moscow.

Prokhorov’s company, which sold its Polyus stake for $3.62 billion, is the only potential bidder for Uralkali that has cash for the deal, said Kirill Chuyko, BCS Financial Group’s head of equity research in Moscow.

Russian entrepreneur Vladimir Kogan, a longtime ally of President Vladimir Putin, is the leading candidate to buy the billionaires’ Uralkali stake, people said on Sept. 13. Other potential approaches may come from billionaires Mikhail Gutseriev and Vladimir Evtushenkov, Forbes Russia reported this month, citing people it didn’t identify.

Preferred Bidder

“Kogan looks like the preferred bidder, given that he has political backing,” Chuyko said by phone. “Prokhorov is just studying the option, but is unlikely to proceed if Kerimov insists on the premium.”

Anton Averin, a spokesman for Kerimov’s Nafta Moskva, declined to comment, as did Andrey Belyak, an Onexim spokesman.

Onexim weighed a purchase of Uralkali in 2010, stepping back to allow the purchase by Kerimov, who was Prokhorov’s partner in Polyus Gold at the time.

Prokhorov, a co-owner of the Brooklyn Nets basketball team, holds 17 percent of United Co. Rusal, the world’s largest aluminum producer and controls Moscow-based Renaissance Credit and Renaissance Capital banks.

Kerimov and his partners’ stake will rise to 38 percent after Uralkali fulfills a pledge to cancel about 12.4 percent of its shares held as treasury. Chengdong Investment Corp., a unit of sovereign wealth fund China Investment Corp., which exchanged bonds for a 12.5 percent stake in Uralkali yesterday, will hold about 14 percent.

Baumgertner is being held in a Belarus KGB prison, charged with abuse of office as Belarusian Potash Co.’s chairman.

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