Aluminum thorns

The human factor may hinder the merger of RUSAL and SUAL

President of SUAL-Holding Brian Gilbertson, as the British Times wrote yesterday, may not receive the position of chairman of the board of directors of the new structure that will arise as a result of the merger of RUSAL, SUAL and the alumina assets of the Swiss Glencore. According to the newspaper, the Kremlin will prefer to see a “representative of Russia” at the head of the united Russian aluminum company. One way or another, the Times points out, Mr. Gilbertson is contractually entitled to a bonus of $50 million if the company goes public or merges. As the newspaper assures, RUSAL refuses to participate in the payment of this bonus and wants this responsibility to be placed on the shoulders of the owner of SUAL, Viktor Vekselberg, who offered these conditions to Mr. Gilbertson. Both RUSAL and SUAL refused to comment on the Times information, calling it “market rumors.” And the head of SUAL's public relations department, Alexey Prokhorov, added that Mr. Gilbertson's contract with the company is confidential, and therefore he is not aware of the existence of any conditions.

At the end of August, the Russian RUSAL and SUAL and the Swiss Glencore signed a tripartite memorandum stipulating the terms of the merger of Russian companies and Glencore's alumina assets. The companies propose to merge under the auspices of RUSAL, which will own 64.5% of the new company, SUAL - 21.5%, and Glencore - 14% of the shares. Under the agreement, RUSAL receives a three-year option to buy out Glencore's stake in the merged company. As a result of this merger, the largest company in the global aluminum business should emerge, producing annually 4 million tons of primary aluminum and 11 million tons of alumina. The transaction is expected to be carried out through the exchange of shares of partner companies. The agreement does not provide for any cash payments. The memorandum expires on October 1. Until this time, the companies must make a final decision on the merger. Since the memorandum is not legally binding, the parties to the agreement may refuse to merge.

Brian Gilbertson is the undisputed authority in the international metals business. Until 2003, he headed the British-Australian BHP Billiton (one of the three largest mining companies in the world), moreover, he was one of the initiators and active participants in the process of merging the British Billiton (in which Mr. Gilbertson worked since 1997) and Australian BHP. The same Times calls Mr. Gilbertson “a businessman famous for his brilliant deals”: ​​in addition to the merger of Billiton with BHP, he facilitated the 1997 merger of Gencor Limited, where he had worked since 1988, with Billiton, then carried out an IPO of Billiton shares, which allowed the company to attract $1.5 billion. He is a recognized professional in the merger of aluminum companies and could provide invaluable services to SUAL and RUSAL.

However, a source from Vremya Novostei, familiar with the negotiations on the process of merging RUSAL and SUAL, claims that in addition to Mr. Gilbertson, the owners of the merged companies, Oleg Deripaska and Viktor Vekselberg, can apply for the post of head of the board of directors of the merged company. The position of general director of the company, as sources previously said, according to the existing agreement, should go to the current general director of RUSAL, Alexander Bulygin.

The Times understands Mr Deripaska is willing to agree to give Mr Gilbertson the position of non-executive chairman. But such a scenario is unlikely to suit the Australian and SUAL. After all, if Mr. Gilbertson is removed from the management of the merged company, then in fact its strategy will be determined by Mr. Bulygin (since if Messrs. Deripaska or Vekselberg receive the post of chairman, their role will most likely be quite nominal, as is now the case in with RUSAL and SUAL). In addition, as the newspaper writes, “he may not even get the position of non-executive chairman due to government pressure.”

Ivan GORDEEV