The Work

December 20, 2010 4:21 PM

Debevoise Advising on $8.1 Billion Russian Potash Merger

Posted by Brian Baxter

Two companies controlled by Russian billionaire Suleiman Kerimov have announced plans to combine operations in an $8.1 billion merger that will create the world's second-largest producer of potash after the Potash Corporation of Saskatchewan. Potash is an increasingly valuable ingredient used to make fertilizers, among other products.

OJSC UralKali announced on Monday that it would acquire rival JSC Silvinit for $8.1 billion in cash and stock. Both companies are based in the Russian city of Perm and owned by Kerimov, an oligarch who was reelected to Russia's upper house of parliament in 2008. The announcement comes only a few days after another major natural resource merger saw eight firms land roles on a $1.2 billion deal that gives Russia's nuclear industry access to African uranium.

Debevoise & Plimpton is advising UralKali on its merger with Silvinit. Corporate partners Alan Kartashkin in Moscow and James Scoville in London are leading a Debevoise team that includes associates Evgeniya Berezkina, Maria Kirienko, Maxim Kuleshov, Robert Manson, and Yulia Sazykina. UralKali is itself led by a lawyer.

CEO Pavel Grachev, a member of the company's board of directors since September, is a former managing partner of Italian firm Pavia e Ansaldo's Moscow office. UralKali's chairman of the board, Alexander Voloshin, is a politically powerful figure who served from 1999 to 2003 as chief-of-staff to former Russian president Vladimir Putin, now the country's prime minister. Marina Shvetsova serves as UralKali's in-house legal director.

Timur Starostin serves as Silvinit's deputy general director for legal issues. Outside counsel for Silvinit were not available by the time of this post. A Silvinit spokesman did not immediately respond to a request for comment on the identity of the company's outside lawyers. (As we've previously reported, under Russian law, the target itself is usually not part of a deal, as the buyer and shareholders of a target generally negotiate the terms of an acquisition themselves.)

Reuters reports that the merger between Silvinit and UralKali will be executed through a share swap with a cash component of $1.4 billion paid by UralKali for a stake in Silvinit. Kerimov took both potash producers earlier this year from the Russian state-owned bank VTB Bank and since then has had his eye on building a potash empire with his business partners, according to the St. Petersburg Times.

Potash has become a hot commodity in recent months. The substance's rising value has been as a major catalyst for corporate work; BHP Billiton spent $350 million in its ill-fated $40 billion bid for the Potash Corporation of Saskatchewan that ended last month; and some large law firms have recently expanded into the sleepy Canadian province to get closer to the product.

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