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Potash producer Uralkali plans $1.3bn share buyback
Uralkali, the world’s largest potash producer by output, is planning its second billion-dollar share buyback this year in a likely prelude to its delisting from London.
The company said on Tuesday that it would spend up to $1.3bn to buy up to 14 per cent of its shares. The buyback, which would probably further reduce its free float from the current level of 23.4 per cent, could lead to a delisting of the company’s global depositary receipts in London, it added. London Stock Exchange rules generally require a free float of 25 per cent.
Paul Ostling, an independent director at Uralkali who conducted a review of the company’s listings, said the board had determined that maintaining a listing in London was “not a strategic priority for the company”. Uralkali, which also has a listing on the Moscow stock exchange, floated in London in 2007.
The move comes amid analysts’ expectations of an ownership shake-up at Uralkali, which accounts for one-fifth of global output of potash, a key fertiliser ingredient.
Russian business daily Vedomosti reported in June that the company may delist in both London and Moscow as a prelude to a merger with fertiliser group Uralchem, which already owns 20 per cent of Uralkali’s shares. The other major shareholders are Onexim, the investment group of oligarch Mikhail Prokhorov, with 20 per cent, and Chengdong Investment Corporation, an arm of China’s sovereign wealth fund, which has a 12.5 per cent stake.
The new share tender by the company follows a $1.1bn buyback completed in June. Onexim sold a 7 per cent stake in Uralkali to reduce its holding to 20 per cent as part of the buyback, raising speculation that it might seek to dispose of its entire stake in the company.
Uralkali’s London-listed global depositary receipts have fallen 25 per cent in the past year, amid falling potash prices and flooding at a mine which accounts for a fifth of the company’s output.
Some politicians in Moscow have suggested that Russian companies ought to delist from London in response to the deterioration in relations with the west, principally over the Ukraine crisis, although few have done so.
Igor Shuvalov, Russia’s deputy prime minister, said last year that Russian companies should consider the possibility of “relisting their companies at the Moscow Stock Exchange for reasons of economic security”.
Mr Ostling said that “regulatory, market and geopolitical developments” had “limited the benefits of the [global depository receipt] listing for the company”. He added that “most of our institutional investors are now already trading” in Moscow.
The terms of the proposed buyback, at $16 per global depository receipt, represents a 10.8 per cent premium to Uralkali’s closing price at the end of last week, the company said.
Source: Financial Times