* Uralkali pulled out of Russo-Belarus sales cartel in July
* Prokhorov to buy 21.75 pct Uralkali stake from Kerimov
* Deal seeks to calm relations with Belarus' Lukashenko
* No imminent progress in cartel re-creation expected
* Analysts doubt sales alliance can revive depressed prices
By Polina Devitt
MOSCOW, Nov 18 Tycoon Mikhail Prokhorov agreed
to buy a stake in Uralkali, the world's largest potash
miner, as Russia seeks to ease tensions over the collapse of a
potash sales cartel with Belarus that drove down global prices.
The deal was blessed by President Vladimir Putin, sources
familiar with the matter said, in a bid to repair ties with
Belarus President Alexander Lukashenko. Russia's ally had
arrested Uralkali's boss after the Russian firm quit the
Prokhorov's investment firm, Onexim, said on Monday it
expected to quickly complete the purchase of Suleiman Kerimov's
21.75 percent stake in Uralkali.
Talks continued on the sale of stakes held by Kerimov's
partners to other buyers in side deals, which linked together
would secure Prokhorov and his allies strategic control over the
Lukashenko, riled by the Uralkali gambit which hit a major
export earner for Belarus, has demanded that Kerimov sell out as
a precondition for freeing Uralkali Chief Executive Vladislav
Baumgertner from house arrest in Minsk.
Uralkali shares gained 3 percent but were still down 4
percent from levels in July, when it quit the Belarusian Potash
Company (BPC) joint venture, which controlled two-fifths of the
$20 billion world market.
"If this helps to stabilise the market and to reach global
peace, we would be glad," BPC representative Irina Savchenko
told Reuters. She declined to comment on the possible
re-creation of the joint trading venture with Russia.
Uralkali's dash for market share triggered a 20 percent drop
in prices of potash, a fertiliser ingredient, leading farmers to
hold off on purchases in anticipation of further falls.
Analysts doubt that the cartel can quickly be restored in an
industry plagued by overcapacity.
"A shift to a joint distribution is not as likely as many
market participants believe," Bank of America Merrill Lynch
analyst Eduard Faritov said a note, adding that Prokhorov would
be reluctant to cede sales volumes to Belarus.
Prokhorov, a long-time former business partner of Kerimov,
has launched a political career in Russia. He ran against Putin
in last year's presidential election, placing second, and
remains a leading figure in the Russian business establishment.
"The purchase of the stake in Uralkali is a long-term
investment in a company that is unique from the standpoint of
its position in its industry and its role in the world economy,"
Onexim Chief Executive Dmitry Razumov said in a statement.
Sources on both sides of the talks said Kerimov's asking
price was based on a $20 billion equity valuation but that the
final price was flexible and would probably be slightly lower.
Uralkali was worth $15.8 billion at Friday's market close.
"There is still quite a lot of wood to chop in terms of
negotiating it and funding," said one financial source familiar
with talks on the deal.
Prokhorov, who owns the Brooklyn Nets basketball team and is
estimated to have a fortune of $13 billion, is flush with cash
after selling his stake in gold miner Polyus a year ago
to Kerimov and partners for $3.6 billion.
State-controlled banks Sberbank and VTB,
and possibly a European bank, may back the deal, the sources
Kerimov, the Dagestani-born owner of top-flight Russian
soccer club Anzhi Makhachkala, was a reluctant seller but was
willing to do so to secure Baumgertner's release, the sources
Baumgertner was arrested in Minsk and has been charged with
exceeding his powers and embezzlement. He faces up to 12 years
in jail if convicted. The Belarusian investigative committee
declined to comment on Monday.
At the same time, Kerimov's partners - Filaret Galtchev with
7 percent of Uralkali and Anatoly Skurov with 4.8 percent -
continued talks on the possible sale of their stakes.
Dmitry Mazepin, co-owner of fertiliser producer Uralchem,
and Russian state arms-to-technology group Rostec are interested
in the stakes of Kerimov's partners, the sources said.
Belarus-born Mazepin could help Prokhorov manage Uralkali
and its relations with Minsk, one source said. Rostec, run by
Putin's colleague at his KGB posting in 1980s East Germany,
Sergei Chemezov, would serve as a "minder" for the Kremlin if it
was brought into the deal, the source added.
Asked whether the Kremlin had given the deal a green light,
Putin's spokesman Dmitry Peskov said: "This is totally a
business issue, and one doesn't need approval from the Kremlin."
Russian state company Rostec does not plan to buy Uralkali,
a Rostec representative said. Uralkali declined to comment.
Uralkali holds around 12 percent of its shares in treasury,
and these are expected to be cancelled within six months. Should
Kerimov's partners also sell, the buyers' combined stake would
rise to 38 percent, ensuring de facto control over the business.