PhosAgro, a major fertilizer producer in Russia, is said to be preparing a bid for the Potash Corporation of Saskatchewan to rival the $39 billion offer from BHP Billiton currently under consideration in Ottawa. Vladimir Litvinenko, chairman of PhosAgro has formally written a letter to Prime Minister Vladimir Putin asking for him to back the bid and muster support from Russian lenders.
Analyst predict that geopolitical importance the deal is such that it would give Russia control of 70 percent of the global potash trade and help it secure its food supply — an issue that came to the fore this summer as the country was wracked by drought and wildfires, leading to a scarcity in certain grains. Banks in Canada had made preliminary agreements to provide half the necessary funds, while rest are said to be obtained from Russian banks. The offer is not very realistic as the size of the bid represents an impossible amount for PhosAgro to raise by itself and also the businesses are too different in size for a deal to work without the involvement of the Russian state.
PhosAgro is a closely held company with close ties to Moscow. The Russian government holds a blocking interest in PhosAgro’s phosphate-producing subsidiary, Apatit While PhosAgro’s shareholders are not known but Andrey Guryev, a powerful Russian politician ranked 54th on Forbes’s list of Russia’s wealthy last year holds a major stake in the company.
Russia’s agrochemical industry has been in a period of upheaval. PhosAgro also announced in August that it was seeking to merge with Silvinit, another potash producer, although the merger was uncertain and other deals were rumored. One advantage a PhosAgro bid for the Potash Corporation would have over that of companies like Silvinit is that PhosAgro does not produce potash and thus would raise no antitrust concerns
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