Mikhail Prokhorov’s Onexim Group said Friday it had agreed that UC Rusal, the world’s largest aluminium producer, could acquire its blocking stake in Norilsk Nickel, in what the two companies said could be the first step in creating a diversified Russian mining giant.
The deal would go ahead if Mr Prokhorov’s ex-partner Vladimir Potanin failed to accept an offer Onexim made earlier this week to sell its 25 per cent plus one share stake in Norilsk for $15.7bn, Rusal and Onexim said in a joint statement Friday night.
Mr Prokhorov has said that Mr Potanin’s Interros Group would have the right of first refusal for the stake but would have to complete payment for the shares within 45 days of the offer, a condition that Interros has indicated could be impossible to meet.
A deal with Rusal could pave the way for the creation of a mining group with huge competitive advantages on the scale of BHP Billiton and Rio Tinto at a time of global industry consolidation, Rusal said, indicating it saw the deal as a first step towards a broader merger.
“This strategic transaction paves the way to develop the enlarged UC Rusal into a global, diversified metals, mining and energy group,” Alexander Bulygin, Rusal chief executive, said.
Under the terms of the deal, Rusal would acquire the 25 per cent plus one share stake in Norilsk in return for Onexim becoming an 11 per cent shareholder in Rusal with the difference to be settled in cash, the two companies said. Rusal would not disclose the financial terms of the deal but it said it already had a commitment from a group of banks, including ABN Amro, BNP Paribas, Credit Suisse and Merrill Lynch, to provide financing.
One industry expert said Rusal, which delayed a listing in London this year, could set its sights on Mr Potanin’s 25 per cent stake next. “They’re not just going to sit with a 25 per cent stake. That’s not the plan,” he said. “I would suspect they would do this deal and then go ahead with the listing which would give them the currency to do the rest.”
Mr Potanin’s Interros declined to comment Friday night, but he has told the Financial Times that a broader merger between Rusal and Norilsk Nickel was a very interesting combination that would create a company with “big potential for further international mergers and acquisitions”.
Rusal said it hoped to complete the transaction in the first quarter of next year pending regulatory approval from Russian and international antitrust authorities.
Norilsk, the world’s largest nickel miner, has a market capitalisation of more than $53bn, while international banks valued Rusal at about $30bn this year, one person familiar with the matter said.
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