Translated material
Norilsk Triangle
Oleg Deripaska officially announced his readiness to buy the main asset of the Onexim group
Aluminum tycoon Oleg Deripaska appears to be eager to get in on Russia's biggest deal. The United Company RUSAL last Friday officially announced its intention to buy a blocking stake in Norilsk Nickel from Mikhail Prokhorov's Onexim group . True, this deal, as stated in the joint press release of the parties, can only be completed if the head of Interros, Vladimir Potanin, refuses Mikhail Prokhorov’s offer to buy out his stake in Norilsk Nickel for $15.7 billion. However, Interros claims that they have not yet given up their intention to purchase shares of the metallurgical company from Mr. Prokhorov’s structures, and therefore refuse to comment on Messrs.’s agreement. Deripaska and Prokhorov.As a Onexim representative told Vremya Novostey, the group signed an agreement of intent with RUSAL last Friday. In accordance with it, the world's largest aluminum company will acquire from Mr. Prokhorov's structures 25% plus one share of Norilsk Nickel in exchange for 11% of RUSAL shares (it is unknown where they will come from - official representatives of RUSAL were unavailable for comment over the weekend) and money (amount not specified). At the same time, representatives of Onexim will join the board of directors of the aluminum company. “The condition for completing the transaction is Vladimir Potanin’s failure to implement Onexim’s offer to acquire a 25% stake in MMC Norilsk Nickel,” the document emphasizes.
For its part, RUSAL has already announced that it has received guarantees from ABN Amro, BNP Paribas, Credit Suisse and Merrill Lynch to provide a loan to pay for the cash component of the transaction. “The transaction is planned to be completed in the first quarter of 2008 after receiving permits from Russian and foreign antimonopoly authorities,” the statement says.
Information that Mr. Deripaska is interested in buying a stake in Norilsk Nickel appeared almost immediately after Messrs. Potanin and Prokhorov decided to divide the business. However, Mr. Prokhorov was simultaneously negotiating the sale of his share with the diamond monopoly ALROSA, but, as the chairman of its board of directors, Deputy Prime Minister Alexei Kudrin, recently said, the parties did not agree on the price and terms of the deal. Thus, there are two potential buyers of the package left - these are the structures of the. Potanin and Deripaska.
As a source close to RUSAL told Vremya Novostei, Mr. Deripaska decided to make an offer to buy Norilsk Nickel after realizing that his united company (created as a result of the merger of the assets of RUSAL, SUAL and the alumina assets of the Swiss trader Glencore, in which Oleg Deripaska's En+ holding owns 66% of the shares, SUAL shareholders - 22%, and Glencore -12%) risks losing its leadership in the global aluminum market. The reason for this was the merger in October of the world's largest aluminum companies - the Australian-British Rio Tinto and the Canadian Alcan (one of the top three global aluminum producers) - and the creation of a new world leader in aluminum production, Rio Tinto Alcan.
Officially, RUSAL General Director Alexander Bulygin said: “For us, this is a strategic deal that gives rise to the creation of a diversified mining, metallurgical and energy corporation in Russia,” his words are quoted in the joint press release of RUSAL and Onexim.
The current main shareholders of Nornickel are Messrs. Prokhorov and Potanin commented on the possibility of RUSAL entering the capital of their company in an interview with The Financial Times, which was published last Friday. Mr Prokhorov said: “I know RUSAL well and I understand its strategy, but its main advantage is that the company owns the energy capacity and is able to obtain cheaper energy compared to its competitors.” In turn, Mr. Potanin noted that he sees sense in combining the efforts of Norilsk Nickel and RUSAL. “Such a combination would be very interesting,” he said. -- A large company will have more serious opportunities to finance its projects. It will have great potential for further transnational mergers and acquisitions.” True, Interros representatives claim that Mr. Potanin gave this interview almost a month ago - long before the partners sent each other proposals to sell Mr. Prokhorov’s share in Norilsk Nickel to Mr. Potanin.
Representatives of Mr. Deripaska for a long time did not comment on information about interest in Norilsk Nickel. However, various sources claimed that negotiations were nevertheless ongoing. At the same time, it is known that Mr. Deripaska does not buy large assets without obtaining the consent of the Kremlin. Thus, given that Mr. Potanin is also very cautious and is unlikely to act without the approval of the Kremlin, Onexim, by announcing the agreement, has largely placed the fate of the deal in the hands of senior government officials.
Naturally, Mr. Potanin will try to consolidate control over Norilsk Nickel himself. As Interros CEO Andrei Klishas said last week, the company has already agreed with a number of Russian and foreign banks to finance the deal with Mr. Prokhorov. All that remains is to agree on the price. However, unlike Mr. Deripaska, Mr. Potanin needs significantly more money, since he is not going to offer Mr. Prokhorov any assets. At the same time, Mr. Prokhorov proposed that Interros pay a 12.5 percent premium to the market price of Norilsk Nickel shares. However, what price he set for RUSAL is not reported.
Thus, to say that the transaction between the years. Prokhorov and Deripaska will take place, it’s too early. After all, according to some reports, the head of Interros began preparing for such an outcome in the summer, conducting negotiations with banks. Whether he managed to find the money or found some other solution to the deal will most likely become clear before the New Year - on November 21, the “divorcing” partners gave themselves 30 days to think about it.