Norilsk jumps to 2-year high as buyback offer tops market price
MOSCOW: OAO GMK Norilsk Nickel, Russia's biggest mining company, jumped to a two-year high in Moscow trading after offering to buy back shares at $25 more than the market price.
Norilsk surged 3.5 percent to $227 on the RTS index as of 12:52 p.m. local time, the highest intraday price since Aug. 5, 2008. The shares climbed as much as 4.8 percent to 7,126.98 rubles on Moscow's Micex exchange, the highest since May 2008.
The company's decision to repurchase stock follows its failed bid to buy back a 25 percent stake held by United Co. Rusal for $12 billion. Rusal's billionaire founder, Oleg Deripaska, has been locked in a dispute with fellow Norilsk shareholder Vladimir Potanin since 2008, and has rebuffed two proposals since October to sell out of the nickel company.
"The failure of the talks is a clear negative for Rusal; we believe that disposal of the stake could have been strongly advantageous for the company," Mikhail Stiskin, a Moscow-based analyst at Troika Dialog, said in a note. "A potential buyback could support Norilsk Nickel's share price in the short term."
From 5 p.m. in Moscow today, Norilsk will buy back as many as 11.9 million shares at $252 apiece, totaling about $3 billion, according to an emailed statement. The buyback includes American depositary shares at $25.20 a share.
The Moscow-based company offered to purchase $3 billion of stock in a public tender by Jan. 21, and $1.5 billion over the year from the market, Norilsk President Andrei Klishas told reporters today in the Russian capital.
Rusal had wanted $16 billion for its stake and Norilsk was ready to pay no more than $14 billion, Interfax reported late yesterday, citing people it didn't identify. Maria Uvarova, a spokeswoman for Norilsk in Moscow, declined to comment.
In October, Rusal rejected a $9 billion offer for its stake from Potanin, who also owns 25 percent of Norilsk, as the shareholders bickered over company strategy.
Rusal reiterated its intention not to sell its Norilsk stake today, saying the shareholding is "strategic," according to an e-mailed statement. At Rusal's request, Norilsk will hold a shareholders' meeting on March 11 to elect a new board, Klishas said. Rusal's Russian depositary shares fell 0.5 percent to 474.52 rubles on the Micex exchange. The transaction will probably be completed in May or June, he said, adding that Norilsk plans to sell shares in Inter RAO within two years. -Bloomberg