RUSAL to buy Norilsk stake
MOSCOW (Reuters) - Russia's United Company RUSAL will buy a strategic stake in Norilsk Nickel (GMKN.MM) from Mikhail Prokhorov's Onexim Group as it seeks to build a globally competitive Russian metals and mining major.
The announcement on Friday came after Prokhorov's erstwhile partner, Vladimir Potanin, declined to exercise his right of first refusal to buy the stake of 25 percent plus one share in Norilsk for $15.7 billion.
"This acquisition progresses UC RUSAL's plan to create Russia's first diversified global metals and mining corporation," RUSAL, controlled by Kremlin-backed billionaire Oleg Deripaska, said in a statement.
Prokhorov would receive an 11 percent stake in RUSAL and an undisclosed cash sum. RUSAL has applied for regulatory approval in seven countries and expects the deal to close in the first quarter, it said.
Interros, Potanin's holding company, said earlier it would not oppose the sale of the Norilsk stake to RUSAL.
"We are not going to create obstacles to the deal with RUSAL," Andrei Klishas, deputy general director of Interros and chairman of Norilsk, told a news briefing.
Under deadlines set by Prokhorov, Potanin would have had to agree by Friday to buy the stake for $330 per share -- and then pay the cash within 15 days.
As the deadline expired, Onexim issued a statement saying it had received no formal offer from Potanin.
"The Onexim Group intends to carry out its agreement with RUSAL," the statement said.
"The end-game for Norilsk Nickel is that Deripaska will acquire control and then bid for the entire company," said Chris Weafer, chief strategist at UralSib. Norilsk's shares eased 2.5 percent, erasing some gains posted this week in anticipation of a RUSAL deal.
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Bankers say RUSAL is progressing a $4.5 billion syndicated loan to back its offer, which it sees as a first step towards creating a national champion capable of competing with the likes of BHP Billiton (BHP.AX) (BLT.L) and Rio Tinto (RIO.AX) (RIO.L).
"Lots of studies suggest being a one-commodity producer is not as good as being diversified, so for RUSAL it makes perfectly good sense," said Robin Bhar, base metals strategist at UBS in London.
"It's about mirroring BHP and Rio, getting closer to the model they've used."
Norilsk, which has a market worth of $51 billion, mines a fifth of the world's nickel and more than half of its palladium. Continued...
