RUSAL has few hours to decide on Norilsk stake sale

MOSCOW (BestGrowthStock) – RUSAL (0486.HK: ) must on Tuesday agree to sell its 25 percent stake in Norilsk Nickel (GMKN.MM: ) for an above-market $12 billion, or risk seeing the miner stage a share buyback which could further cut RUSAL’s influence.

The world’s largest nickel and palladium miner has given RUSAL a deadline of 1200 GMT (7 a.m. ET) on Tuesday, and is due to hold a board meeting later in the day. It has also indicated it could raise its offer for the stake, though it did not provide a new figure.

If the bid succeeds, it could mark an end to a long-running feud between Norilsk Nickel’s two core owners, Vladimir Potanin and Oleg Deripaska, who controls RUSAL. Both are at odds over the company’s strategy and dividends.

Two high profile RUSAL shareholders — Mikhail Prokhorov and Viktor Vekselberg — favor selling the stake, Norilsk said in a statement on Monday. Prokhorov told Reuters last week that a price range of $12-15 billion would be fair.

“Given the support… from RUSAL’s main shareholders, we see a high chance that RUSAL will accept a higher offer price, presumably $15 billion,” UralSib analysts said in a note.

“While initially Norilsk may overpay… a potential re-rating of Norilsk shares on the back of the resolution this ongoing shareholder dispute could compensate for this.”

Current market capitalization values RUSAL’s 25 percent stake in Norilsk Nickel at around $10.65 billion, according to Reuters calculations.

If RUSAL decides not to sell the stake, its influence in Norilsk may dwindle as Norilsk Nickel pushes on with a share buyback. The company last week said it would buy back $4.5 billion worth of its shares in two stages.

“The management and Interros, Potanin’s investment vehicle, could assemble up to a 50 percent stake in the company… and ensure full control, albeit with one hostile blocking shareholder (UC RUSAL),” Troika Dialog said.

RUSAL has said it opposes the buyback and has called for an emergency general meeting (EGM) in its second attempt to elect a new board at Norilsk Nickel. On the current 13-strong board, RUSAL has three seats against Interros’s four.

“Once the money is allocated for this (buyback), RUSAL is unlikely to receive any other offer in the medium term,” UralSib said.

(Reporting by Aleksandras Budrys; Editing by Mike Nesbit)

RUSAL has few hours to decide on Norilsk stake sale