MOSCOW--Russian tycoon Mikhail Prokhorov on Friday sold his
entire 37.8% stake in the country's largest gold miner, Polyus Gold
International Ltd. (PGIL.LN) to two billionaire bidders for a
combined $3.62 billion after the deal was approved by the U.K.'s
takeover panel.
Mr. Prokhorov's exit from Polyus signals a significant shift for
one of Russia's wealthiest men and the 68th richest in the world,
who has vowed to focus more of his energy on political aspirations
and less on his business ventures. Polyus represented the largest
piece in Mr. Prokhorov's empire, which includes a substantial stake
in United Co. Rusal PLC (0486.HK), banking, energy and media
holdings and the Brooklyn Nets basketball team in the U.S.
In a statement, Mr. Prokhorov's holding company Onexim Group
said while it was proud of having played a part in creating Polyus
and turning it into a world leader, it was time to get out.
"In light of...the offer that was received and our view of the
balance between the company's achievements and its potential, we
made the decision that the time had come for Onexim Group to sell
and realize its profit," said Onexim Chief Executive Dmitry
Razumov.
Onexim says it sold an 18.5% stake to Lizarazu Ltd., a company
associated with real-estate baron Zelimkhan Mutsoyev, for $1.77
billion. It also sold 19.28% of the company to Receza Ltd., a firm
associated with Gavril Yushvaev, for $1.85 billion. Mr. Yushvaev
was the former co-owner of Russian juice maker Wimm-Bill-Dann,
which was sold to PepsiCo Inc. (PEP) in 2010 in the largest ever
foreign acquisition of a Russian company. He is worth an estimated
$1.2 billion, according to Forbes.
In September, Onexim had said it was in talks with two potential
buyers for Mr. Prokhorov's stake in the company--which has the
world's third-largest gold reserves.
The proposed deal ended up before the U.K.'s takeover panel to
determine whether the proposed buyers were acting independently or
in concert as a single owner. Had the panel determined that the two
were acting together, giving them control of more than 30% of
Polyus, it would have forced a mandatory offer to buy out minority
stakeholders.
When Onexim first revealed the talks, it laid out a possible
deal that involved the sale of less than 20% of the company to each
of the two then-undisclosed parties. Speculation immediately
focused on the role of Mr. Prokhorov's co-owner in Polyus, Suleiman
Kerimov, who owns 40.2% of the company's stock through his holding
company Nafta Moskva.
A person familiar with the negotiations told The Wall Street
Journal that talks had involved Mr. Kerimov personally, and a
consortium of business partners who would each buy small stakes in
Polyus, thereby avoiding one shareholder passing the 30% ownership
threshold. Mr. Mutsoyev, who is worth $1.5 billion according to
Forbes, is a partner with Mr. Kerimov in potash giant Uralkali
(URKA.RS).
Nafta Moskva has from the start denied any involvement in the
deal.
Analysts said Mr. Prokhorov's departure would pave the way for a
clearer management strategy and likely higher dividends.
"In the past there were two key shareholders who had differing
views on strategy. Now the strategy will be driven by Mr, Kerimov
alone, so Polyus can start paying higher dividends," said UBS
metals and mining analyst Alexei Morozov.
Polyus shares were trading higher Friday.
Since the deal talks became publicly known, many analysts have
said a sale could also lead to a possible merger with gold and
silver producer Polymetal International PLC (POLY.LN), which was
once owned by Mr. Kerimov and remains partly held by businessmen
close to him. But Barry Ehrlich, of Alfa Bank, said such a merger
seems unlikely in the short term, given the probable structure of
the deal to buy Mr. Prokhorov's Polyus stake.
"The transaction was likely to be heavily leveraged so the new
shareholders' priority now is to boost cash flow and dividends to
reduce that leverage," he said. "That would make a merger deal only
possible as a share-for-share transaction which would probably be
unattractive to Polyus shareholders."
Write to Lukas I. Alpert at lukas.alpert@dowjones.com
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