Norilsk Nickel Sells $3.5 Billion Stake to Trafigura After Pursuing Rusal

Dec. 22 -- OAO GMK Norilsk Nickel, the mining company whose largest holders are locked in a dispute, agreed to sell $3.5 billion of stock to commodities trader Trafigura Beheer BV as analysts signaled a possible end to the feud.

Norilsk will sell an 8 percent stake in the form of American depositary receipts to gain funds for “general purposes,” the Moscow-based company said in a statement yesterday. Trafigura has no plans to increase its holding to more than 10 percent, Norilsk said.

Billionaire shareholders Oleg Deripaska and Vladimir Potanin have bickered over influence on Norilsk’s board and use of cash in a feud dating back to 2008. Norilsk last week offered $12 billion to buy back the 25 percent stake held by Deripaska’s United Co. Rusal, and yesterday’s accord would provide cash for such a deal, according to Nomura Holdings Plc.

"The sale of treasury stock may indicate that Norilsk is going ahead with its plan to buy out” Rusal, said Vladimir Zhukov, an analyst at Nomura in Moscow. Selling 8 percent would also keep Norilsk below the 30 percent threshold that triggers a mandatory offer to minority holders, he said.

While Rusal rejected Norilsk’s bid, analysts including Zhukov said the aluminum company may stand to benefit from such a deal. "It’s a very attractive price,” Zhukov said Dec. 16.

No Discussion

As part of the transaction, Trafigura may have asked the company “to direct a certain portion of nickel sales via the trading house,” said Dmitriy Kolomytsyn, an analyst at Morgan Stanley in Moscow. Trafigura couldn’t be reached for comment while Norilsk spokeswoman Maria Uvarova declined to comment when contacted in Moscow.

Norilsk Nickel, the world’s biggest nickel producer, said in August it declined an offer from Glencore International AG to take over the mining company’s nickel sales. Glencore owns 8.75 percent of Rusal.

Trafigura, based in Amsterdam, is the world’s second- largest trader of non-ferrous metals. It had revenue of $47.3 billion last year compared with $106.4 billion at Switzerland- based Glencore, according to the company’s websites.

"We are concerned that an asset worth over $3.5 billion was monetized without discussion and voting at the board,” Rusal said yesterday in a statement. “Moreover, the stake was sold to Trafigura, a company which is a direct competitor of Norilsk Nickel for marketing and sales of its metals.”

'Ultimate Acquisition’

The sale to Trafigura could presage an “ultimate acquisition of Rusal’s stake in Norilsk,” whereby Trafigura provides funding for Norilsk’s bid, said Erik Danemar, an analyst at Deutsche Bank AG in Moscow. Norilsk’s Uvarova and a spokesman for Trafigura both declined to comment.

"We consider Trafigura to be an important industry investor in Norilsk Nickel,” the company’s press service said by e-mail yesterday. "Selling a stake to Trafigura further strengthens our partnership.”

Norilsk was up 0.2 percent at 6,694.98 rubles at 1:41 p.m. in Moscow, while Rusal advanced 2.6 percent to HK$11.26 in Hong Kong.