Prokhorov to Buy 21.75 Percent Stake in Uralkali

By Andrew Fusco,
International Business Editor

Russian billionaire tycoon, and owner of the National Basketball Association’s Brooklyn Nets, Mikhail Prokhorov, has agreed to purchase Suleiman Kerimov’s 21.75 percent stake in Uralkali. Uralkali which is based in Russia, is the world’s largest potash miner.

The exact terms of the transaction were not disclosed by Onexim, Prokhorov’s in¬vestment firm.

In a report by Reuters Onexim CEO Dmitry Razumov said, “The purchase of the stake in Uralkali is a long-term invest¬ment in a company that is unique from the standpoint of its position in the industry and its role in the world economy.”

Kerimov and Prokhorov are long time business partners, which many believe will lead to the terms of the deal being handled rather easily. Onexim said the deal would be officially completed very shortly, as it will not require regulatory approval.

According to the Wall Street Journal, a person with knowledge of the deal said that it should be priced around $4 million. Keri¬mov’s partners, who own roughly another 11.8 percent of the company, are expected to sell of their stakes in the near furture as well.

It is believed that this sale will help put a major dispute between Russia and Belarus to rest. The issue was caused in July, when Uralkali pulled out of a part¬nership that marketed 40 percent of global potash exports.

Belarusian authorities arrested Ural¬kali’s CEO Vladislav Baumgertner back in August on the belief that he abused his power during this trading venture. Uralkali spokesmen believe that the charges being brought against Baumgertner are com¬pletely motivated by politics and do not have much credibility.

While it is not likely this deal will mend this issue completely, analysts be¬lieve that this is deal is an important step in resolving the matter.

In a report from the Wall Street Jour¬nal, Denis Vorchik of Uralsib Capital, said, “Uralkali’s CEO remains under arrest, and there are a lot of unresolved issues between the two companies that are as much on a political level as they are on a corporate one. There is a long way to go to resume effective sales cooperation, but it seems to be a move in a positive direction.”

For many years potash producers have chosen to keep their prices high by limiting their output. However, since Uralkali left this agreement back in July, potash prices have dropped by close to 25 percent, which has been very beneficial to buyers of the fertilizer.

Belaruskali, the Belarus side of this agreement, has recently acknowledged that it would be difficult to restore this trading operation. The led to them increase output of potash greatly. While this will undoubt¬edly help the potash industry in eastern Eu¬rope, it is believed that this deal will not have much of an effect, if any effect, on the potash markets in North America.

This is the first large business deal for Prokhorov in a few years. Prokhorov has kept his business dealings to a minimum recently as he has been focusing on launch¬ing his political career. In 2012, he came in third in the Russian presidential election, with Vladimir Putin winning.

Prokhorov losing in the presidential election could see him return more of his attention to this business ventures. It is no secret that he is one of the most success¬ful businessmen on the planet, and could stand to make even more money if he were to get involved in more business deals like this one.

A version of this article appeared in the Tuesday, Nov. 26 print edition.

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