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. Last Updated: 07/27/2016

Uralkali's Owner Wants to Unload Company

Billionaire Dmitry Rybolovlev is in talks to sell control of Uralkali, his $7 billion potash miner, sparking a share rally on hopes that the move would ease political risks around the company.

Uralkali, whose export agent accounts for more than 30 percent of global potash sales, said in a statement that Rybolovlev’s Madura Holding “was in preliminary discussions with a number of interested third parties” to sell his 65.6 percent stake.

Shares in Uralkali jumped 11.5 percent in London and closed 7.6 percent higher as analysts said the Kremlin would allow only a loyal tycoon or a state company to buy the firm, which would help ease tensions with the government over a mine flooding.

“While the conflict with the Kremlin over the mine flood has been successfully settled for now … there could hardly be any guarantee that the political climate would not change,” Troika Dialog said in a note.

Uralkali has paid $250 million to compensate for the collapse of its mine in the Urals mountains in 2006 instead of several billion first threatened by Deputy Prime Minister Igor Sechin.

Another possible reason for the sale could be Rybolovlev’s need for cash in his international divorce battle with wife Yelena, analysts said.

“A less likely reason could also be the ongoing divorce and the necessity for Rybolovlev to raise some amount of cash for a potential unfavorable settlement,” Troika said.

Analysts said global mining companies — such as K+S, PotashCorp, Vale or BHP Billiton — could be interested in the stake but would be barred for political reasons.

Kommersant quoted sources as saying the stake has been offered to several billionaires.

These include Polyus Gold co-owners Suleiman Kerimov and Mikhail Prokhorov and Novolipetsk Steel owner Vladimir Lisin. Sistema owner Vladimir Yevtushenkov and Vladimir Potanin, a major Norilsk Nickel shareholder, were also approached.

Sources close to Potanin and Prokhorov said they were not interested. Another source said Kerimov has been holding talks for the past month. Kerimov’s Nafta Moskva holding declined to comment.

The other businessmen could not be reached or declined to comment.

“We doubt selling above a 30 percent stake is feasible, given that anything beyond that would trigger a minority shareholder buyout,” said Mikhail Stiskin, an analyst at Troika Dialog. “Hardly anyone in Russia will have the firepower to execute the minority shareholder buyout, unless the acquisition price is well below market.”

Rybolovlev, who owns about 25 percent of larger competitor Silvinit, is ranked Russia’s 10th-richest man by Forbes with fortune of $8.6 billion.

In February, he hired Denis Morozov, a former head of Norilsk Nickel, to run Uralkali. The billionaire is seeking more than Uralkali’s market price for the stake, Dow Jones reported late Wednesday, citing people familiar with the matter.

(Reuters, Bloomberg)