Court halts Russia's $23.9-billion potash merger

JOHN BOWKER

Russian potash miners Uralkali and Silvinit are set for a legal battle to complete their $23.9-billion merger after a court halted the process following a claim by investor Acron.

Uralkali and Silvinit – both majority owned by billionaire tycoon Suleiman Kerimov and associates – agreed to merger terms at a shareholder meeting earlier this month.

The combined group would be the world’s second biggest producer of potash, a key ingredient in fertilizer, and now a hot commodity in a world struggling to cope with growing pressures on food supplies.

Fertilizer group Acron – with 6 per cent of Silvinit, according to Thomson Reuters data – has long opposed the deal as it believes terms are stacked against minor shareholders in Silvinit and strongly favour those in Uralkali.

Uralkali said in a statement on Monday that a court had ruled to issue a temporary injunction on the merger agreement pending a hearing on April 12.

“[Acron is] again attempting to challenge the share conversion ratios duly approved by the shareholders of both companies and [is] seeking an injunction to block the merger-related procedures,” Uralkali said in a separate statement, also on Monday.

“Uralkali and Silvinit believe that the claim is entirely without merit and intend to contest it vigorously,” it said,

The court action did not affect the completion of Uralkali’s purchase of a 20-per-cent stake in Silvinit, which forms part of the merger process.

Acron’s stance was backed late last year by Moscow’s Investor Protection Association and many analysts.

Concerns over corporate governance standards in Russia and treatment of small shareholders, in particular, has long been seen as a deterrent to overseas investors.

Uralkali said Acron and three investment groups had also filed a claim against the two potash companies in a court in Perm, a city east of Moscow close to Uralkali’s home base of Berezniki.

This claim is seeking to scrap the decision to approve the merger, overwhelmingly supported by other shareholders and expected to be completed in May.

A spokeswoman for Acron declined to comment.

Russian business daily Vedomosti reported earlier this month that Acron’s CEO Ivan Antonov had asked Prime Minister Vladimir Putin to stop the deal, although Mr. Kerimov is known to be an ally of Russia’s most powerful politician and is likely to have secured his backing.