Roman Abramovich buys Norilsk Nickel stake to end power feud

Russian billionaire invests in top metal supplier, mired for years by dispute, for undisclosed sum

PUBLISHED : Wednesday, 05 December, 2012, 12:00am
UPDATED : Wednesday, 05 December, 2012, 3:12am

Russian billionaire Roman Abramovich agreed to buy 7.3 per cent of OAO GMK Norilsk Nickel, as the two biggest owners of the world's top supplier of the metal seek to end a four-year feud over control of the company.

Abramovich's Millhouse investment company will acquire the stake in Moscow-based Norilsk as part of a settlement between shareholders United Co Rusal and billionaire Vladimir Potanin, Hong Kong-listed Rusal said yesterday. The purchase price wasn't disclosed.

Potanin, whose Interros Holding owns 28 per cent of Norilsk, will take over as chief executive, Rusal said. Rusal, controlled by billionaire Oleg Deripaska, owns 25.1 per cent of Norilsk.

Norilsk rose in Moscow trading, valuing the company at about US$30 billion and making it the only gainer in the 30-stock Micex Index. Rusal rose 0.7 per cent to HK$4.57 in Hong Kong.

Potanin and Deripaska have battled publicly - and in the courts - for control of Norilsk since May 2008. The dispute, which involved some of Russia's richest men, mired the country's biggest mining company in lawsuits, as well as constraining investments.

Rusal has rejected at least three offers to sell out of Norilsk since October 2010, rebuffing an US$8.75 billion bid from Norilsk for 15 per cent in September last year.

The presence of Abramovich as a third party in the agreement between Deripaska and Potanin may help ensure it lasts longer than the previous one, Nikolay Sosnovskiy, a VTB Capital analyst in Moscow, said.

Pierre Lorinet, chief financial officer of Trafigura Beheer BV, which owns less than 1 per cent of Norilsk, said the dispute had "made it difficult" for the firm to fulfil its potential.

Rusal has called many times for the ousting of Norilsk CEO Vladimir Strzhalkovsky, claiming the former chief of Russia's tourism agency lacked mining industry experience. Potanin and Rusal also clashed over Norilsk's plans to buy back stock and the percentage of profit the company, which spent US$9 billion in buybacks last year, paid in dividends.

The shares Abramovich is buying are part of the 17 per cent of the company held by units as so-called quasi-treasury shares. The remainder of those shares will be cancelled, Rusal said.