I guess the Uralkali CEO didn't check with the authorities before deciding to start a price war.
Russian in Talks to Sell Stake in Potash Maker Uralkali
Russian billionaire Suleiman Kerimov is in talks to sell his 21.7% stake in potash giant Uralkali in an effort to defuse a conflict with Belarus, where authorities have jailed Uralkali's CEO.
MOSCOW—The Russian billionaire who is the main shareholder in potash giant OAO Uralkali URALL +17.66%is in talks to sell his stake in an effort to defuse a bitter conflict with Belarus, where authorities have jailed Uralkali's CEO, according to a person familiar with his thinking.
"If selling his stake will help get this man released, then he's ready to sell his stake," this person said, referring to billionaire shareholder Suleiman Kerimov, whose foundation controls 21.7% of Uralkali. Mr. Kerimov himself is the subject of an arrest warrant from Belarus, as well.
Bidders include a number of other Russian tycoons, as well as metals giant OAO Norilsk Nickel, NILSY +0.21%according to people close to the discussions. A deal would value Mr. Kerimov's stake at just over $4 billion and could be completed as early as the end of this month, according to the person familiar with his thinking. The situation remains fluid and a deal may not be completed or could take a different form, distancing Mr. Kerimov from the company without having to sell out, according to people close to the discussions.
Uralkali rocked the global world of potash, a fertilizer ingredient, when it announced July 30 that it was dropping out of a partnership with Belarus and would sell on its own, vowing to cut prices to boost volumes. The move threatened to scuttle the informal global cartel that had kept potash prices high. Share prices of potash producers from Germany to Canada plunged, while farmers rejoiced.
But the harshest reaction came from Belarus, whose Soviet-style economy gets about 7% of its export earnings from selling potash, primarily through the partnership with Uralkali. Blasting the Russian company's alleged betrayal, Belarussian police arrested Uralkali CEO Vladislav Baumgertner on Aug. 26 as he prepared to leave Minsk after a meeting with the prime minister. Charged with abuse of power for his role as chairman of the potash partnership, he was jailed in the Belarussian KGB prison in Minsk known as "Amerikanka."
Days later, they issued a warrant for Mr. Kerimov's arrest on similar charges. Uralkali dismissed the charges as politically motivated but Mr. Kerimov has steered clear of Belarus.
The spiraling dispute highlighted the tangled web of business and political interests involved in the potash trade, as well as the complex relationship between Russia and authoritarian ally and neighbor Belarus, which relies heavily on support from Moscow.
"The relations between states–especially allies like Russia and Belarus –always have priority over the relationship between corporations and entrepreneurs," Russian President Vladimir Putin's spokesman Dmitry Peskov said last week.
After the arrest, Moscow threatened to cut back oil shipments to Minsk and limit imports of dairy products. Minsk fired back, refusing to deal with Mr. Kerimov and calling on the Kremlin to find a new shareholder for the company.
Asked about the conflict last week, Mr. Putin said the Russian government is keeping a low profile because "we want to resolve this problem, not force it into a dead end."
Russian officials and people close to Mr. Kerimov deny he is under any political pressure to sell. One person close to him noted that the Kremlin isn't eager to be seen to be giving in to what they perceive as bullying by Belarussian President Alexander Lukashenko.
Tuesday, Mr. Lukashenko sounded confident, denouncing Messrs. Baumgertner and Kerimov as "scoundrels," adding that, "sooner or later, the Russians will come back to us wanting to restore the status quo." Subject to U.S. and European Union economic sanctions, Belarus has struggled to find buyers for its potash outside the partnership and been forced to cut production.
Russia considers Uralkali a strategic asset and authorities would be unlikely to allow a foreign takeover of the company. Since the conflict with Belarus erupted, a number of Russian tycoons have approached Mr. Kerimov about buying him out, according to people close to the situation.
In addition to Norilsk Nickel, bidders include Vladimir Kogan, a St. Petersburg banker; oil tycoon Mikhail Gutserriev; telecoms-and-oil magnate Vladimir Yevtushenko, and Filaret Galchev, who already owns a stake in Uralkali. None of them could be reached for comment Tuesday.
"They are all willing to pay a price that suits him, now it's a question of who he wants to sell the company to," said the person close to Mr. Kerimov. "There are no financial problems or political pressures to make a sale," he said. Mr. Kerimov is seeking a valuation above current market prices, which have been depressed by the collapse of the cartel.
It's not clear whether a new shareholder would agree to revive the partnership with Belarus, however.
In announcing the break in July, Uralkali blamed Belarus for selling potash outside the partnership, undermining global prices. Mr. Lukashenko authorized such sales in a Dec. 2012 decree that triggered a drop in global prices.
Mr. Kerimov traveled to Minsk twice this year to try to negotiate with Mr. Lukashenko to cancel the decree but had no success. In July, Uralkali management proposed pulling out of the partnership and changing strategy to target sales volumes and allow prices to fall.
"It's a publicly traded company and this was a corporate decision made by management and the board of directors," said the person familiar with Mr. Kerimov's thinking. "It wasn't viewed as something political that needed to be raised at the government level. That proved to be a miscalculation." |
