Russia's Norilsk soars on buyback plan

29th December 2010, Comments 0 comments

Norilsk Nickel shares soared Wednesday after the world's biggest nickel producer announced a major shares buyback programme following its failure to acquire a 25-percent stake in the company owned by a Russian rival.

Russia's high-stakes mining dispute came to a boil on Tuesday evening when UC Rusal -- the aluminum giant controlled by the billionaire Oleg Deripaska -- rejected Norilsk's 12 billion dollar offer for the shares.

The purchase would have enabled Norilsk to end a protracted disputed for control of the Arctic giant that also includes another player with a 25 percent stake in the company -- Vladimir Potanin's Interros.

News reports said Rusal's Deripaska was demanding 16 billion dollars for his part of the nickel producer while Norilsk was willing to pay no more than 14 billion.

It tabled a formal 12 billion offer earlier this week that was flatly rejected by Rusal.

"Rusal has always emphasised that its stake in (Norilsk) its a strategic investment, and that the company does not indent to sell it," Rusal said.

Norilsk's board moved quickly to mitigate the damage by approving a one-year 4.5-billion-dollar shares buyback programme intended to give a boost to the company's stock.

"Norilsk Nickel is determined to deliver value to its shareholders," the company said in a statement. "We believe that Norilsk Nickel offers great potential to its investors."

The company said the buyback offer concerns both the company's shares listed in Russia and its American Depositary Receipt (ADRs) traded in New York.

"The exact timing and size of the tender offer or open market purchases, if any, will depend on market conditions and other factors," the Norilsk statement said.

But Corbiere Holdings -- a small unit of Norilsk -- said in a statement that on Wednesday evening it would start buying back 11.9 million ordinary shares at 252 dollars a piece.

The price puts a premium on Norilsk shares and the news sent the stock soaring on Moscow's RTS stock exchange to close the day 5.28 percent higher.

Rusal immediately denounced the buyback programme as "yet another manifestation of gross corporate blackmail" and threatened to sue the Western banks advising Norilsk.

"What kind of a recommendation is this," Interfax quoted Deripaska as saying. "Are the banks not supposed provide adequate guidance for investors?"

© 2010 AFP

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