UPDATE 2-Norilsk Nickel Says 2 RUSAL Investors Back Stake Bid-Shanghai Metals Market

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UPDATE 2-Norilsk Nickel Says 2 RUSAL Investors Back Stake Bid

Industry News 09:29:56AM Dec 28, 2010 Source:SMM

MOSCOW, Dec 27 (Reuters) - Russian miner Norilsk Nickel (GMKN.MM: Quote) said UC RUSAL (0486.HK: Quote) shareholders Mikhail Prokhorov and Viktor Vekselberg back its offer to buy the aluminium giant's Norilsk stake, lending weight to the $12 billion bid.

The world's largest nickel and palladium miner, which has given RUSAL a deadline of 1200 GMT on Tuesday, also indicated it could raise its offer for the 25 percent stake, though it did not provide a new figure.

"All parties should understand that the final transaction price can not exceed the maximum level which allows the company to comfortably sustain its current production and implement smoothly its long-term production strategy, social programs and modernization plan," Norilsk Nickel said on Monday.

If the bid succeeds, it could mark an end to a long-running feud between Norilsk Nickel's two core shareholders, who are at odds over the company's strategy and dividends.

Vladimir Potanin owns 25 percent of Norilsk Nickel through his Interros investment company, while Oleg Deripaska controls 25 percent through RUSAL.

The duo are among the most powerful figures in Russia's business community, making it difficult for the Kremlin to forge a compromise at the Arctic miner.

RUSAL in October unsuccessfully sought to dismiss Norilsk Nickel's board at an extraordinary general meeting, and last week Deripaska's firm called for another EGM following a sale of a stake in the company to Trafigura.

Spokespeople for Vekselberg and Prokhorov declined to comment on the offer when contacted by Reuters on Monday.


ANALYSTS EYE SALE

Moscow-based analysts were divided about the price and timing of the deal, which they ultimately expect to take place.

"I think it will be sold at around $14-$15 billion," said Maxim Semyonovykh, an analyst with Alfa-Bank. "But the issue of the timing remains open."

"The final price will depend on negotiations," said Kirill Chuiko of UBS. "I will not be surprised if it turns out to be $1 billion higher than the Norilsk proposal."

RUSAL has said it does not plan to sell, although it has hired Bank of America Merrill Lynch to appraise its stake.

RUSAL has reduced its debt to $11.75 billion at the end of the third quarter, down from $13.63 billion at the end of last year. A sale of the Norilsk stake could wipe out this amount in one stroke.

"From all points of view, RUSAL will gain by selling (the stake) and putting an end to the longtime feud. I believe, the deal will be closed in the beginning of next year," Chuiko said.

Prokhorov, who owns 17 percent of RUSAL, told Reuters last week a $12 billion to $15 billion offer would be fair.


BUY BACK

Norilsk Nickel said it will proceed with a planned share buyback if RUSAL rejects its offer.

The company last week said it would buy back $4.5 billion worth of its shares in a two-stage programme.

RUSAL on Monday said it opposes this step.

"RUSAL views the buyback as an attempt by management to consolidate shares in its own hands at the expense of other Norilsk Nickel shareholders," the aluminium producer said in an emailed statement.

Norilsk Nickel said it is acting on behalf of all shareholders and that it has enough cash to buy the shares without raising additional funds.

In its earlier statement outlining the offer for RUSAL's minority stake, Norilsk Nickel said a consortium of international banks have agreed to co-finance the acquisition.

Norilsk Nickel would then cancel up to 20 percent of its capital stock in 2-3 years, depending on market conditions

Norilsk Nickel's board is also due to meet on Tuesday, the company said in a separate statement.
 

UPDATE 2-Norilsk Nickel Says 2 RUSAL Investors Back Stake Bid

Industry News 09:29:56AM Dec 28, 2010 Source:SMM

MOSCOW, Dec 27 (Reuters) - Russian miner Norilsk Nickel (GMKN.MM: Quote) said UC RUSAL (0486.HK: Quote) shareholders Mikhail Prokhorov and Viktor Vekselberg back its offer to buy the aluminium giant's Norilsk stake, lending weight to the $12 billion bid.

The world's largest nickel and palladium miner, which has given RUSAL a deadline of 1200 GMT on Tuesday, also indicated it could raise its offer for the 25 percent stake, though it did not provide a new figure.

"All parties should understand that the final transaction price can not exceed the maximum level which allows the company to comfortably sustain its current production and implement smoothly its long-term production strategy, social programs and modernization plan," Norilsk Nickel said on Monday.

If the bid succeeds, it could mark an end to a long-running feud between Norilsk Nickel's two core shareholders, who are at odds over the company's strategy and dividends.

Vladimir Potanin owns 25 percent of Norilsk Nickel through his Interros investment company, while Oleg Deripaska controls 25 percent through RUSAL.

The duo are among the most powerful figures in Russia's business community, making it difficult for the Kremlin to forge a compromise at the Arctic miner.

RUSAL in October unsuccessfully sought to dismiss Norilsk Nickel's board at an extraordinary general meeting, and last week Deripaska's firm called for another EGM following a sale of a stake in the company to Trafigura.

Spokespeople for Vekselberg and Prokhorov declined to comment on the offer when contacted by Reuters on Monday.


ANALYSTS EYE SALE

Moscow-based analysts were divided about the price and timing of the deal, which they ultimately expect to take place.

"I think it will be sold at around $14-$15 billion," said Maxim Semyonovykh, an analyst with Alfa-Bank. "But the issue of the timing remains open."

"The final price will depend on negotiations," said Kirill Chuiko of UBS. "I will not be surprised if it turns out to be $1 billion higher than the Norilsk proposal."

RUSAL has said it does not plan to sell, although it has hired Bank of America Merrill Lynch to appraise its stake.

RUSAL has reduced its debt to $11.75 billion at the end of the third quarter, down from $13.63 billion at the end of last year. A sale of the Norilsk stake could wipe out this amount in one stroke.

"From all points of view, RUSAL will gain by selling (the stake) and putting an end to the longtime feud. I believe, the deal will be closed in the beginning of next year," Chuiko said.

Prokhorov, who owns 17 percent of RUSAL, told Reuters last week a $12 billion to $15 billion offer would be fair.


BUY BACK

Norilsk Nickel said it will proceed with a planned share buyback if RUSAL rejects its offer.

The company last week said it would buy back $4.5 billion worth of its shares in a two-stage programme.

RUSAL on Monday said it opposes this step.

"RUSAL views the buyback as an attempt by management to consolidate shares in its own hands at the expense of other Norilsk Nickel shareholders," the aluminium producer said in an emailed statement.

Norilsk Nickel said it is acting on behalf of all shareholders and that it has enough cash to buy the shares without raising additional funds.

In its earlier statement outlining the offer for RUSAL's minority stake, Norilsk Nickel said a consortium of international banks have agreed to co-finance the acquisition.

Norilsk Nickel would then cancel up to 20 percent of its capital stock in 2-3 years, depending on market conditions

Norilsk Nickel's board is also due to meet on Tuesday, the company said in a separate statement.