Sibur in talks with PhosAgro to sell mineral fertilizer division

RIA Novosti reported that Russian petrochemical group Sibur is holding talks on selling its subsidiary Sibur-Minudobreniya to agrochemical holding company PhosAgro in exchange for shares in the united company.

A merger of PhosAgro and Sibur-Minudobreniya would make the group the leading nitric and phosphate fertilizer producer in Russia. Sibur may get from 20% to a blocking stake in PhosAgro in exchange for its subsidiary.

Sibur spokesman was quoted as saying that the company thinks it expedient to unite nitric fertilizer producers and considers different options, while PhosAgros spokesman said that the company was also considering various alternatives for the merger.

A source close to Sibur was quoted as saying the merger is only one consolidation option while there are many factors which may influence the companies decision. In particular, the companies need to decide on PhosAgro strategy, its plans to bid for Canada Potash Corp and on the governments stake in Apatit controlled by PhosAgro.

Analysts say PhosAgro is exploring ways to expand its business amid consolidation in the mineral fertilizer sector in particular a potential merger between Russia Uralkali and Silvinit and the increase in domestic gas prices which will negatively affect nitric fertilizer producers.