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04. Juni 2007

Norilsk Surges on RusAl Buy-In Talk

Norlisk / Rus AL say that shares in Norilsk Nickel surged 8.5 percent Friday on unconfirmed reports that United Company RusAl was seeking to buy into it.

"RusAl has approached the authorities for clearance for a potential acquisition of assets on the traded base metals market. Norilsk Nickel is a priority asset for RusAl," Interfax cited sources as saying Friday.

"We are indeed reviewing the possibilities of diversifying our business, but to speak of any concrete projects or acquisitions plans is preliminary,'' RusAl spokeswoman Larissa Belyayeva said in an e-mailed statement.

RusAl, majority-owned by billionaire Oleg Deripaska, produces some 12 percent of all aluminum manufactured worldwide.

Last year, the company said it wanted to diversify into other metals to rival BHP Billiton, the world's largest mining company.

Kommersant reported Friday that Norilsk Nickel was "an optimal asset for acquisition" for RusAl.

The paper said that both Deripaska and his biggest partner in RusAl, billionaire investor Viktor Vekselberg, have on various occasions expressed interest in acquiring more domestic metals and mining assets.

Norilsk said Friday that it would not comment on the speculation.

Billionaire Mikhail Prokhorov, Norilsk's CEO until March, told reporters Thursday that he might consider selling his 22 percent stake in the miner next year.

Norilsk, which has a market capitalization of $38 billion, mines one-fifth of the world's nickel and more than half of its palladium, a precious metal used in jewelry and car exhausts.

Analysts said RusAl was unlikely to acquire Norilsk given the high cost involved and RusAl's own commitments.

"Norilsk Nickel's stock price shot up on the expectation that something substantial was about to happen," said Rob Edwards, an analyst with Renaissance Capital. "The excitement is going to be temporary because this is going to be difficult to pull off."

Industry watchers said at play could be Prokhorov's 22 percent stake in Norilsk, worth about $10 billion.

But Dmitry Razumov, CEO of Onexim Group, Prokhorov's new private fund, said there had been no talks of a sale.

"We have not held any negotiation whatsoever about the sale of our share in Norilsk Nickel," Dmitry Razumov said Friday in an e-mailed statement. "We have not received any offer about the sale of our share of Norilsk Nickel from RusAl or any other company."

Analysts said the next logical step for RusAl would be to acquire a diversified metals portfolio, starting with copper and zinc.

"At the present market price, such an acquisition would make good economic sense for RusAl, which would like to control a stake in Norilsk Nickel," said Sergei Donskoi, a metals analyst with Troika Dialog.

"The aggressive behavior of Norilsk shares today was only partly due to speculation about RusAl's incursion," said Andrei Kukk, chief trader at UralSib. "It is more a reflection of the general mood in the market."

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