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For more than two years, Russian billionaire Mikhail Prokhorov wanted to launch an initial public offering in Toronto for his junior mining vehicle Intergeo MMC Ltd.
The plan failed because of rough capital market conditions. So Intergeo developed a new strategy: buying its way onto the TSX instead.
On Thursday, the Russian firm announced a friendly merger with Mercator Minerals Ltd., a Canadian copper miner with strong growth prospects but major balance sheet concerns in the short term. Mr. Prokhorov’s ONEXIM Group will make a US$100-million investment in the new entity (to be called Intergeo Mining Ltd.), including a bridge loan to Mercator that stabilizes the company.
“Over the last six to nine months, we have been looking at what is possible from an acquisition point of view,” Intergeo chief executive John Lill said in an interview. “We eventually thought that Mercator was quite a good fit for us and very complementary to our assets.”
The transaction did not come out of nowhere; there have been rumours for years that Intergeo wanted a Toronto listing and access to Canada’s capital markets. It represents the first major Canadian market foray for Mr. Prokhorov, a billionaire known for his playboy lifestyle and for owning the NBA’s Brooklyn Nets. He used to be a large shareholder in Norilsk Nickel, and recently agreed to buy a 21.75% stake in Uralkali, a controversial potash company.
Mr. Prokhorov, who controls 99% of Intergeo through ONEXIM, will remain the controlling shareholder after the merger. Mercator shareholders will own 15% of the combined company.
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