* Deal ends four-year shareholder dispute
* Abramovich to buy 7.3 pct stake, worth $2 bln
* Chelsea boss will hold largest voting stake
* Main owners suspend legal proceedings
* RUSAL shares up 2.4, Norilsk gains 1.5 pct
By Polina Devitt and Megan Davies
MOSCOW, Dec 4 Two Russian billionaires ended a
four-year battle over the world's biggest nickel and palladium
miner on Tuesday by giving the largest voting stake in their $30
billion company to a third: Kremlin-favoured tycoon Roman
Norilsk Nickel, which mines the vast mineral
deposits of Russia's far north, was one of the biggest prizes
handed to insiders in the post-Soviet carve-up of Russian
industry that created a generation of oligarchs.
Vladimir Putin, who returned to the presidency in May, has
said he wanted an end to a feud between two of Russia's richest
men - Vladimir Potanin and Oleg Deripaska - over board control
and payments to shareholders in the firm.
Tuesday's deal appears to bear the stamp of the Kremlin,
with Abramovich, the well-connected owner of London's Chelsea
football club, acting as enforcer to end the dispute.
Potanin and Deripaska agreed that Abramovich would buy a 7.3
percent stake, in the form of treasury stock, at market price.
The stake is now worth around $2 billion.
The three parties will each contribute equal stakes,
amounting to 22 percent of Norilsk, to an escrow account that
will be voted by Abramovich's investment firm Millhouse - giving
him the largest say over how the company is run.
"Millhouse will control the compliance with the partnership
agreement while voting with this block of shares," Potanin and
Deripaska said in a joint statement issued by their firms.
Millhouse declined comment.
The arrangement reduces the voting power of Potanin's
holding company, Interros, now 28 percent, and that of
Deripaska's Hong Kong-listed aluminium giant RUSAL,
currently 25 percent.
In return, Deripaska will get the higher dividends he has
long sought. Potanin - who has controlled Norilsk since he won
it in the "loans-for-shares" privatisation scheme he ran as a
top official in the 1990s - will be chief executive.
Analysts said the prospect of higher dividends would boost
sentiment among portfolio investors, but new management would
have to im prove e fficiency to trigger a sustained rally in the
stock. Norilsk has a fre e float of of 18 percent.
" It's all about whether this shareholder agreement will
translate into more effective management," said Sergey Donskoy,
metals and mining analyst at Socie te Generale. "If it does, that
could help lead to a mor e substantial re- rating."
Norilsk trades at around 8.5 times forecast 2012 earnings ,
putting it at a discount of a round 2 0-25 percent to its R ussian
mining se ctor peers, Donskoy estimates.
Norilsk shares gained 1.35 percent in Moscow to 4,876.
Shares of RUSAL, listed in Hong Kong, gained 2.4 percent to
HK$4.64, outperforming a flat broader market.
PEACE BREAKS OUT
With Tuesday's deal, the sides suspended legal cases. A
London arbitration court had been due to open hearings into a
case dating back to 2010 in which Deripaska accused Interros,
Potanin's investment company, of reneging on a deal to run
Norilsk in the interests of all shareholders.
Potanin and Deripaska have been locked in a shareholder
dispute since the RUSAL bought a one-quarter stake in Norilsk
just before the 2008 global crash in a deal around $14 billion.
The acquisition was meant to herald a merger into an
all-Russian major able to compete with global miners such as BHP
, but that plan was crushed by the financial crisis.
Loss-making RUSAL is now burdened by $10.7 billion in net
debts, greater than its market capitalization of $8.9 billion,
and is battling a fall in aluminium prices. Deripaska has
resisted parting with the stake in Norilsk, now worth around $7
billion, the lion's share of RUSAL's equity value.
Talks to end the dispute have been on-and-off but sources
said in October they had resumed, fuelling speculation that a
peace deal was in the works.
Abramovich, the 68th-richest man in the world with a fortune
estimated at $12.1 billion by Forbes magazine, is widely viewed
as having among the strongest Kremlin ties of the oligarchs.
Now a co-owner of FTSE 100-listed steel firm Evraz,
Abramovich won control of oil firm Sibneft after its
privatisation in the 1990s. He sold Sibneft in 2005 to Gazprom
, the state gas export monopoly, for $13 billion.
RUSAL said the deal would ensure Norilsk pays stable
dividends for the years 2012-2014. The shareholders agreed that
Norilsk will pay at least 50 percent of its annual net income as
dividend, said a source close to one of shareholders.
Norilsk will cancel the rest of its treasury shares -
amounting to about 10 percent. Interros and RUSAL are not to
sell shares for five years and Millhouse is not to sell for
three years under a lock-up agreement.