MOSCOW, Sep 05, 2011 (Dow Jones) -- United Co. Rusal PLC's (0486.HK) board Monday unanimously declined OAO Norilsk Nickel's (GMKN.RS) offer to buy a part of Rusal's stake in the company for about $8.75 billion, Interfax reports citing a source close to Rusal's shareholders.

The rejection by Rusal, the world's largest aluminum producer, opens the way for a Norilsk share buyback.

Norilsk, the world largest nickel and palladium producer, had offered to buy 28,594,162 shares--equivalent to about 15% of the company--out of the 25% stake owned by Rusal. The offer, which stipulates the payment of $306 a share, was valid until Monday.

Rusal, which is controlled by Russian billionaire Oleg Deripaska, had twice rejected offers to sell its stake in Norilsk at a premium, and analysts have doubted it would agree this time.

Rusal previously rejected offers from Norilsk to buy the entire 25% stake for $12 billion in December, and to buy 20% for $12.8 billion in March. The latter offer worked out at $335.70 a share.

Rusal is locked in a conflict with Interros Holding, owner of about 30% in Norilsk, which itself is controlled by billionaire Vladimir Potanin.