Uralchem Owner Mazepin Agrees to Buy 20% Uralkali Stake

OAO Uralchem investors led by billionaire owner Dmitry Mazepin agreed to buy 20 percent of OAO Uralkali, giving him joint control of the world’s largest potash producer with Mikhail Prokhorov’s Onexim Group.

The purchase includes the holdings of billionaires Anatoly Skurov and Filaret Galchev, Moscow-based Uralchem said in a statement today. The plan to buy the stake, valued at about $3 billion at current prices, was first reported Nov. 26. Onexim last month agreed to buy 21.75 percent of Uralkali from billionaire Suleiman Kerimov.

In July, Uralkali roiled the $20 billion potash market and sparked a dispute with Belarus by quitting a partnership that controlled more than 40 percent of global exports. Belarus arrested Uralkali Chief Executive Officer Vladislav Baumgertner in August, while President Aleksandr Lukashenko called for a change of ownership at the Russian company.

“Today’s announcement signals that the deals to change control of Uralkali will close really soon and it will open the way to talks between Uralkali and Belarus to restore some kind of partnership,” Konstantin Yuminov, a Raiffeisen Bank analyst, said by phone in Moscow.

The Uralkali holding is a strategic investment and the transaction is expected to be completed shortly, said Uralchem. Mazepin owns 95.2 percent of the fertilizer maker, with the rest held by management, according to its 2012 annual report. Uralchem shareholders agreed to buy Moscow-traded shares and global depositary receipts, it said in the statement.

Majority Stake

Onexim and Mazepin are set to have a majority in Uralkali as they will be able to vote a 12 percent stake that is held by a unit of the Berezniki, Russia-based mining company. After Kerimov and his partners close deals with Onexim and Uralchem’s owners, he will control a minority stake of about 5 percent that is now held by associates, people familiar with the plans said last week.

Uralkali said today it isn’t involved in the transaction. It rose 2.1 percent in Moscow trading to 169.19 rubles.

Belarus-born Mazepin will buy 4.8 percent of Uralkali from Skurov and 7 percent from Galchev, people familiar with the matter told Bloomberg News last 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, people said.

OAO Acron said today it sold Uralkali shares in the open market to reduce its stake to 1.8 percent from 2.9 percent, with proceeds of 5.5 billion rubles ($170 million). Uralchem’s spokesman Alan Basiev declined to say today whether those shares are a part of the stake that Uralchem’s owners are buying.

Putin Talks

Baumgertner, 41, was extradited to Russia Nov. 22, almost three months after his arrest, and is now in a Moscow jail as his lawyer seeks his release. 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.

Baumgertner said Uralkali’s Belarusian partners were selling potash cargoes outside their marketing venture, giving this as the reason for the withdrawal. The CEO said his company would step up production to win market share, a move that sent stocks of rival producers tumbling from Toronto to Tel Aviv.

Uralkali has said it is working at full capacity and expects to sell 13 million metric tons of potash next year. Potash Corp. of Saskatchewan Inc. CEO Bill Doyle said in October that the Russian producer’s decision to expand sales volumes at the expense of prices has been self-destructive and the “dumbest thing” he has seen.

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