Uralkali, which like Silvinit is effectively controlled by Russian mining-to-banking tycoon Suleiman Kerimov, offered to buy rival Silvinit for cash and shares.
Uralkali’s offer for 20 per cent of Silvinit, or 1.57m ordinary shares is at $894.5 per share, which compares with the $940 price on Moscow’s dollar-denominated RTS exchange. The total cash price would be $1.4bn, both firms said.
The merger of the two companies will then be completed through a share swap.
Shares in Silvinit fell nine per cent in Moscow on the news, while Uralkali stock added around two per cent.
Analysts at Uralsib estimated that the deal valued Silvinit at a 35 per cent discount to Uralkali. They said it was far from a merger of equals.
“They [the terms] don’t look very good for Silvinit, it values the business at about 40 per cent discount to Uralkali... That’s in the interest of Uralkali shareholders,” said Bob Kommers, analyst at Deutsche Bank.
“They are buying a similar asset at a significant discount, which is very attractive [for Uralkali]. There are some operational synergies, which are in line with our estimates. Those are the main benefits.”
Uralkali said the deal had already gained the support of 53 per cent of its ordinary shareholders and from 67 per cent of Silvinit’s.
FAST FACTS | URALAKI / SILVINIT
The new company will be one of the largest potash makers in the world, second only to Canada’s Potash
The new company will have a market capitalisation of around $24bn (£15.5bn)